China denies plan to relax macro control
(Agencies)
Updated: 2004-07-14 17:06

China will not ease measures aimed at cooling the economy anytime soon as decision makers wait for further evidence of the effectiveness of the policies introduced over a year ago.

"We are still at a critical stage for macro-economic controls ... we should not waver after scoring some initial success," said the National Development and Reform Commission, the top economic planning body.

"Instead we should further implement the measures put forward by the central government to bring the economy under control," the commission said in statement on its website.

Slowing fixed-asset investment and money supply, and increasing grain production were only initial successes, the commission said, and the country still had a long way to go before its "economic structure" improved.

China is trying to slow an economy that soared 9.8 percent in the first quarter of the year on the back of sharply increasing fixed asset investment, credit expansion and foreign investment inflows.

The government is worried about the pace of growth, especially in sectors deemed to be overheating such as steel, autos, real estate and aluminum.

Over the past year both the government and the central bank have undertaken a series of credit tightening measures to try to rein in investment and bank lending.

"The essence of the current macro controls is to accelerate the adjustment of the economic structure to achieve a balanced and sustainable development of the economy so we should make more efforts to improve the structure while implementing these control measures," the commission said.

It further warned that consumer prices, which rose 4.4 percent in May -- the highest rate in seven years -- were set to climb further in June on the back of rising oil and electricity prices.

Concern at the supply and demand mismatch in the transport, coal, electricity and oil sectors could also stoke inflation, it added.

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