CHINA has tightened controls on short-term foreign borrowing by domestic banks to protect the country''s financial security and help correct international imbalances, the currency regulator said yesterday

The State Administration of Foreign Exchange has lowered borrowers'' outstanding foreign-debt quotas for 2007, the Beijing-based regulator said in a statement on its Website, without being more specific.

"Short-term foreign debt is rising too fast," the regulator said.

China''s medium and short-term foreign debt rose 16 percent in 2006. The country''s foreign debt was US$288 billion as of March last year. Short-term debt now accounts for about 57 percent of the total, the regulator said.

Foreign currency deposits in China stood at 1.3 trillion yuan (US$168 billion) at the end of January, according to money supply data released by the government.

The regulator has broadened the classification of short-term foreign borrowing to include 90-day deposits by foreign companies, according to Bloomberg News.