Chinese language - China mulls measures to cool economy

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China mulls measures to cool economy

(Agencies)
Updated: 2007-06-14 15:04

More measures are in the pipelines to cool China's economy, Premier Wen
Jiabao said Wednesday. [Xinhua]

BEIJING - More measures are in the pipelines to cool China's economy,
Premier Wen Jiabao said in comments published Thursday, amid a flurry of
new data showing breakneck growth.

Monetary policies should be "moderately tightened" to ensure stable
economic growth, Wen told a Wednesday meeting of China's cabinet, the
State Council, according to the official Xinhua news agency.

Wen highlighted China's trade surplus, industrial production and
inflation as three key areas of concern.

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Official data released on Monday showed China's trade surplus surged to
US$22.45 billion in May, up 73 percent from a year earlier.

"The country will continue to adjust export rebates and tariffs on
certain items while further improving policies to boost imports in a bid
to address the climbing trade surplus," Xinhua quoted Wen as saying.

On Tuesday, the government released statistics showing China's inflation
rate jumped to 3.4 percent in May, well above the government's target of
3.0 percent, with a sharp spike in food prices largely to blame.

To address rising inflation, Wen pledged to stabilise food prices by
ensuring adequate food supply and improved quality supervision.

Wen also said the problem of excess liquidity in the capital markets
would need to be addressed.

"Financial, fiscal and taxation measures should be employed to guide the
flow of capital. There should be more channels for capital outflow and
for the use of foreign exchange," he said.

The government has raised interest rates twice this year and increased
the amount of money the banks must hold in reserve five times in an
effort to slow the economy which grew a blistering 11.1 percent in the
first quarter.

At the same time, the measures were intended to cool the runaway
stockmarket but it took a tripling in stamp duty on share transactions at
the end of May to force a halt there and since then, investors have
returned to the charge.

(For more biz stories, please visit Industry Updates)

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