China's economy remains on the brink of overheating following
another 12 months of soaring industrial output and money supply, a
central government report said on Wednesday.
By June this year, industrial production had been overheated for
seven months in a row, said the report from the State Information
Center, under the National Development and Reform Commission.
Industrial added value in the first half rose 18.5 percent year
on year, up 0.8 percentage points over the rise in the same period
of last year.
Industrial production will continue to rise rapidly in the
latter half of the year but its growth rate was likely to slow down
slightly due to government restrictions on exports in sectors
involving high energy consumption and heavy pollution, said the
report.
Fueled by the brisk consumable market, light industry will
expand steadily, said the report.
M1, a narrow measure of money supply including cash and demand
deposits, became overheated in March, with its balance rising 20.9
percent year on year to 13.6 trillion yuan (US$1.77 trillion) by
the end of June.
Bank lending showed a continuous tendency to overheat throughout
the last 12 months, with new Renminbi loans adding up to 2.54
trillion yuan in the first six months of the year, up 368.1 billion
yuan from a year ago.
After maintaining a relatively stable level in the January-April
period, fixed asset investment began to bounce back in May as the
January-May figure soared 25.9 percent, compared with 25.5 percent
in the first four months and 24 percent for the whole of 2006.
The report said the consumer price index, the country's
inflation rate, remained "normal" over the 12 months although
rising food prices pushed the index above the government's target
of three percent for four consecutive months.
To keep prices stable, the government should continue to
subsidize farmers, postpone price reforms on water, power and gas
and tighten supervision of commodities related to people's
livelihood, including food, education and medical care, said the
report.
The government should also increase the minimum living allowance
of low-income families and set up a temporary assistance system in
order to prevent their living standards from falling as prices
rise, it added.
(Xinhua News Agency August 2, 2007)
