NBS: China closer to objectives of cooling overheated economy
(Xinhua)
Updated: 2004-06-16 14:17

China has not yet claimed a successful curbing of the overheated economy despite the signs of economic slowing-down witnessed in May, and the country still seeks to rebalance the national economy to a fast but stable growth.

According to the latest official statistics, the fixed asset investment, a major contributor to the economic overheating, has dropped from 34.7 percent in April to 18.3 percent in May, and meanwhile, the increase momentum of industrial production, money supply and consumer price index also dissolved during the period of time.

China is still very cautious of the challenges to its rapid- growing economy, citing the excess investment in fixed assets and energy supply as fundamental. However, as some Western media reported, the hope for a soft-landing for Chinese economy is expanding.

China's National Bureau of Statistics (NBS) announced in Beijing Tuesday that the industrial output grew 17.5 percent year on year to 431 billion yuan (US$52.5 billion) in May. It was 1.6 percentage points lower than in April, continuing the downward trend in monthly growth since March.

The slower growth in the output of energy, raw materials and consumer goods categories, explained in the NBS monthly report, was the main reason behind the continuous cooling down of industrial expansion.

China faces a quite different situation from what it dealt with in the 1990s, economic analysts pointed out, explaining that the overheating is still structural and triggered by the expansion of credit loans in certain industrial sectors.

In a latest central bank move, commercial banks' reserve requirement was raised to 7.5 percent from 7 percent beginning April 25, meaning a loss of 110 billion yuan (US$13.3 billion) in their available funds that could otherwise be used for lending. China still orders commercial banks to park part of their deposits in the central bank to guard against future operation risks.

But the central bank promised no "one-size-fits-all cut" in credit and loan extension so as to avoid a boom and bust in the economy.

"In general, the economic outlook is sound, characterized by a continued, fast growing GDP and upgraded economic efficiency," noted the central bank in a recent monetary report.