CHINA’S central bank said Friday it wants to see a “healthy” stock market, a day after surging Chinese shares slumped more than 6 percent in record trading volume as investors fled tighter borrowing rules.

    In its 2015 financial stability report, the People’s Bank of China warned of a slowing economy and rising debt levels, but repeated its vow to deepen China’s nascent financial market through reforms.

    The central bank said in the report released online it was monitoring widely-recognized financial risks in the world’s second-biggest economy, including heavily-indebted local governments and a slowing real estate market.

    It did not address the dangers of China’s soaring shares, saying only that it wishes to promote a “stable” bourse. Chinese stocks have zoomed up 140 percent in the last 12 months.

    “We will promote stable and healthy development of the stock market, and continue to expand the main board and the small-and medium boards,” the central bank said, adding that there are plans to set up a new board on the Shanghai Stock Exchange.

    Chinese stocks, which ended flat Friday after a volatile session, skidded earlier last week as more brokerages tightened margin trading requirements and the central bank drained cash from the money market.

    There are worries that China’s buoyant stock market is being powered by its looser monetary policy.

    Even though the central bank has cut interest rates three times in six months to stoke growth in China’s stuttering economy from a six-year low, real interest rates in China are still more than 3 percent, Morgan Stanley said in a report earlier this month.

    That is well above real rates in Japan, Europe and the United States, where borrowing costs are negative, the investment bank said.

    The central bank acknowledged the problem of high borrowing costs in China, saying it would lower interest rates in a “targeted” fashion, but did not elaborate. (SD-Agencies)