CHINA may gradually expand asset-backed securitization to enhance the efficient use of capital, a central bank official said yesterday.

The central bank wants to encourage financial institutions to use securitization as a regular business tool, Liu Jianhong, an inspector at the financial market division of the People's Bank of China, told a forum in Beijing.

"The central bank will coordinate with authorities in enhancing support to the industry" and ensuring that securitization matches the economic goals of the country, Liu said.

In a report on Wednesday, Fitch Ratings said that although the government wants to expand funding channels for banks, it will promote securitization with caution as it wants to keep a grip on credit risks.

"The Chinese government recognizes that Chinese banks can benefit from securitization in terms of credit risk and asset liability management, as well as providing the banks with an alternative funding channel," Fitch said. "At the same time, the government also emphasizes that the development of securitization should be consistent with the macro-economic control policy objectives."

So far 89.6 billion yuan worth of securitized products have been issued in China, the PBOC said.