Chinese officials were meeting Wednesday to look at new steps to cool off
China's sizzling economy as the top planning agency called for tighter bank
credit and curbs on construction, Xinhua News Agency reported.
A man walks past newly built apartment
complexes in Shanghai, May 11, 2006 . Chinese officials were meeting
Wednesday to look at new steps to cool off China's sizzling economy as the
top planning agency called for tighter bank credit and curbs on
construction, Xinhua News Agency reported. [AP
Photo] |
The reports suggested that
Beijing should take further measures to contain growth in spending on
factories and other assets that may ignite a financial crisis.
More than 100 economic officials were at the five-day meeting that began
Tuesday in the seaside resort of Beidaihe, the Xinhua reported.
The officials were looking at "how to slow down economic growth when some
economists say it is already overheating," improve energy efficiency and narrow
a growing gap between rich and poor, the reports said.
A report by the State Council's National Development and Reform Commission
(NDRC) called for "stricter controls on the number of new projects, more stringent land
management (and) tighter bank lending," according to Xinhua.
China's economic growth surged to 11.3 percent in the second quarter, driven
by fixed-asset investment that rose by 29.8 percent during the first six months,
according to the government.
Investment in some industries grew even faster, reaching 44.5 percent in auto
manufacturing and 40.6 percent in textiles, according to the NDRC report issued
Tuesday.
The problems were attributed to local governments' blind pursuit of rapid
economic development, excessively driven by growth in fixed assets investment,
the NDRC report said. "Rampant illegal land use exacerbated the problem."
The central government wants rapid growth to spread prosperity to the
hundreds of millions of people who have been left behind by China's economic
boom.
But runaway spending on factories, luxury apartments and other unneeded new
assets could ignite inflation or leave companies and banks with dangerously high
debt.
The government has tried to rein in credit by raising interest rates and
ordering banks to set aside more reserves, reducing the amount of money
available for lending.
Economists say another rise in interest rates is possible, as is a rise in
the value of China's currency, the yuan, which might restrain exports by making
its goods more expensive.
Beijing also has raised taxes on real estate sales to discourage speculation,
imposed limits on foreign investment in property and banned some projects such
as luxury villas outright.
But despite increasingly urgent statements from the central government,
lower-level officials often are reluctant to enforce controls that might hurt
local economies.
"We have already introduced several batches of measures in economic control
since 2003," an unidentified NDRC official said. "But more often than not, they
got ignored or became distorted at the local level."
The NDRC said last week it expects growth to slow only slightly to 10.8
percent in the July-September quarter.
Even as it tries to rein in investment, the government is trying to spur
growth in the countryside and is promising billions of dollars in new spending
there on roads, schools and other projects.
The Communist Party says the annual meeting of its Central Committee in
October will focus on building a "harmonious country".
