China is unlikely to tap the global bond market this year amid concerns that such borrowing could drive up foreign exchange reserves, a senior Finance Ministry official said on Wednesday.

Vice Finance Minister Li Yong said in May that the government was planning a global bond issue this year to help boost investor confidence and develop benchmarks for domestic firms.

But the South China Morning Post reported in August that the cabinet was blocking the planned issue of up to US$3 billion in global bonds by the ministry and two state-owned policy lenders -- China Development Bank and Export-Import Bank of China.

"The chance for issuing global bonds is diminishing due to various economic considerations," said the official, who requested anonymity.

But the official said the ministry had yet to receive a formal reply from the cabinet.

China sold US$1.7 billion in foreign-currency bonds globally in 2004. But it stayed out of the market last year as government officials worried that growing capital inflows were adding up to upward pressure on the yuan.

An official at China Development Bank, which sold US$1.0 billion in global bonds last September, said the bank may not be able to sell overseas bonds this year.

"It has become increasingly difficult for us to issue bonds in overseas markets this year," said the official.

China's stockpile of foreign exchange reserves, the world's largest, had swelled to US$954.5 billion at the end of July as a result of a huge trade surplus as well as inflows of foreign investment and capital betting on a stronger yuan.

The yuan has appreciated a further 2.6 percent since it was revalued by 2.1 percent to 8.11 per dollar in July 2005, but China continues facing pressure from trading partners, especially the United States, to let the yuan rise more quickly.

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