By Li Zengxin (m.ming7.cn)
Updated: 2007-08-09 16:34

The central bank said on Wednesday it would put the task of preventing the national economy from overheating at the top of its priorities for current macro control.

The People's Bank of China said it would continue to implement prudent monetary policy in the second half and rely on necessary macro control measures to maintain the stability of the country's financial situation.

The country's economy has recorded a stable and fast growth in the first half, and it is highly possible it could maintain a high growth rate in the second half under favorable conditions, said the central bank in its second-quarter monetary report.

The central bank admitted that the country is coming under increasing pressure from price hikes, and acknowledged inflation risks are "worthy of attention".

The People's Bank of China said in its second-quarter monetary report published on Wednesday that the current rising prices were not solely caused by accidental and temporary factors, adding that inflation risks were on the rise. It warned that the rising food prices could spread to other consumer products.

A survey by the central bank in the second quarter showed that 40.2 percent of those interviewed, the second highest recorded since 1999, said they were worried about inflation.

China's consumer price index (CPI) rose 3.2 percent in the first half of this year, and the growth rate was 1.9 percentage points higher than the year-earlier level. The June CPI growth reached 4.4 percent, the highest in 33 months.

Meanwhile, the insurance regulator is mulling a decision to release restrictions on foreign investment in Chinese insurers. In a draft rule, the China Insurance Regulatory Commission removed a provision from the current regulation which sets limit on a foreign investor's holding in a local insurance company at 10 percent at the highest. The cap on combined stake held by foreign investors in a single local insurer, however, remained at 25 percent.

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