| Report highlights ways to help stop China's economy from overheating |
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| 2007-12-03 05:29 |
| From:Shanghai Daily Article type:Reproduced |
China should strengthen regulations on fixed-asset investment to prevent the economy from overheating, according to a report published Friday by the State Information Center, a research unit under the National Development and Reform Commission.
The report also said China should apply various measures to control rises in consumer prices and prevent excess inflation.
To cope with the changes in the global market, China should adopt a moderate increase in exchange-rate flexibility, the report said.
In the short term, China should accelerate the pace of the yuan's appreciation to curb soaring excess liquidity.
In the long run, China should cooperate with partners in the East Asian area to form a new currency system.
"Judging from the October data, some key figures are growing fast, indicating the risks of an overheated economy," said the report.
On Tuesday, the Political Bureau of the CPC Central Committee decided that prevention of an overheated economy and the prevention of substantial inflation should be major targets for macro-economic control next year.
China's gross domestic product to the end of September increased 11.5 percent year on year to 16.6 trillion yuan (2.21 trillion U.S. dollars). But this was overshadowed by rising consumer prices, which grew 6.5 percent in October from a year earlier, the highest since the seven percent hike recorded in December 1996.
Spending on China's urban fixed assets in the first 10 months rose 26.9 percent to 8.9 trillion yuan. The growth rate outpaced that of the previous month by 0.5 percent.
"We should control both the speed and the structure of the investment, which are vital to prevent an overheated economy," said the report.
To achieve this, China should tighten rules over the management of new projects and direct investment into more high-tech and environmentally friendly sectors based on newly-issued guidance for foreign investors.
Meanwhile, the report said China should control investment demand to curb price rises, among other measures such as further regulating the money supply and the commodity supply, improving the market supervision system and fighting against practices such as hoarding and overcharging.
To rein in runaway property prices, China should reduce the quota of space for industrial purposes and leave it for residential use, said the report.
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