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BIZCHINA / Comments/Analysis

Nation advised to curb assets prices via cost controls

(chinadaily.com.cn)
Updated: 2007-07-05 10:25

In view of evident signs of economy overheating in the first half this
year, thegovernment should, in the second half, tighten macro controls on
the interest rate,foreign exchange rate,tariffrebate, labor cost, and
land and other resources costs, to curb excessive growth of investments
and export and bring assets prices under control, proposed a report from
the macro-economic research group of the State Information Center.

The report said that the growth rate of China'sgross domestic
product(GDP) for the entire 2007 may reach 10.9 percent, slightly higher
than last year's GDP growth. However, the growth of the overall economy
may slow down in the second half of this year as compared with the first
half.

According to the report, the nominal growth rate of totalretailsales of
consumer goods for 2007 is expected to be 15.8 percent, an increase of
2.1 percentage points from last year's growth rate. The whole
country'sfixed assets investment will grow by 24.2 percent, 0.2
percentage points higher than last year's growth. The total exports will
increase by 26 percent, and imports will increase by 19.5 percent. Trade
surpluses will reach US$275 billion, up 55 percentyear-on-year.
Industrial added values will rise 17.6 percent, one percentage point
higher than last year's growth rate. Theconsumer price indexwill rise by
3.3 percent.

Related readings:
?Central bank to apply consistent, moderate tightening policies
?Macro economic climate index stable in May
?Central bank: CPI to grow 3.2% in 2007
?Economy to sustain fast growth for 2 more decades

The report proposed more fiscal supports to the country's structural
adjustment. It also proposed a mix of monetary policies, such as
accelerating yuan appreciation, interest rate and reserve ratios hikes,
and suspending the interest tax, to increase capital cost of investments.

The government should also encourage energy conservation and emission
reduction through measures of pricing, taxation and market entry,
according to the report.

(For more biz stories, please visit Industry Updates)

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