China looks at cooling economy BEIJING

Officials were meeting yesterday to look at new steps to cool off China’s sizzling economy as its top planning agency called for tighter bank credit and curbs on construction, state media reported.

The reports suggested Beijing believes earlier measures, including an interest rate rise in April, are failing to contain runaway growth in spending on factories and other assets that Chinese leaders worry could ignite a financial crisis. More than 100 economic officials were at the five-day meeting that began Tuesday in the seaside resort of Beidaihe, the Xinhua News Agency and newspapers reported.The officials were looking at “how to slow down economic growth when some economists say it is already overheating,” improve energy efficiency and narrow a growing gap between rich and poor, the reports said.They didn’t identify any of the participants or say what possible measures they were considering.A report by the Cabinet’s National Development and Reform Commission called for “stricter controls on the number of new projects, more stringent land management (and) tighter bank lending,” according to Xinhua.China’s economic growth surged to 11,3 per cent in the second quarter, driven by fixed-asset investment that rose by 29,8 per cent during the first six months, according to the government.Investment in some industries grew even faster, reaching 44,5 per cent in auto manufacturing and 40,6 per cent in textiles, according to the NDRC report issued Tuesday.It blamed “local governments’ blind pursuit of rapid economic development, excessively driven by growth in fixed assets investment,” the China Daily newspaper said.”Rampant illegal land use exacerbated the problem.”President Hu Jintao’s government wants rapid growth to spread prosperity to the hundreds of millions of people who have been left behind by China’s economic boom.But Chinese leaders worry that runaway spending on factories, luxury apartments and other unneeded new assets could ignite inflation or leave companies and banks with dangerously high debt.The government has tried to rein in credit by raising interest rates and ordering banks to set aside more reserves, reducing the amount of money available for lending.Economists say another rise in interest rates is possible, as is a rise in the value of China’s currency, the yuan, which might restrain exports by making its goods more expensive.Nampa-APMore than 100 economic officials were at the five-day meeting that began Tuesday in the seaside resort of Beidaihe, the Xinhua News Agency and newspapers reported.The officials were looking at “how to slow down economic growth when some economists say it is already overheating,” improve energy efficiency and narrow a growing gap between rich and poor, the reports said.They didn’t identify any of the participants or say what possible measures they were considering.A report by the Cabinet’s National Development and Reform Commission called for “stricter controls on the number of new projects, more stringent land management (and) tighter bank lending,” according to Xinhua.China’s economic growth surged to 11,3 per cent in the second quarter, driven by fixed-asset investment that rose by 29,8 per cent during the first six months, according to the government.Investment in some industries grew even faster, reaching 44,5 per cent in auto manufacturing and 40,6 per cent in textiles, according to the NDRC report issued Tuesday.It blamed “local governments’ blind pursuit of rapid economic development, excessively driven by growth in fixed assets investment,” the China Daily newspaper said.”Rampant illegal land use exacerbated the problem.”President Hu Jintao’s government wants rapid growth to spread prosperity to the hundreds of millions of people who have been left behind by China’s economic boom.But Chinese leaders worry that runaway spending on factories, luxury apartments and other unneeded new assets could ignite inflation or leave companies and banks with dangerously high debt.The government has tried to rein in credit by raising interest rates and ordering banks to set aside more reserves, reducing the amount of money available for lending.Economists say another rise in interest rates is possible, as is a rise in the value of China’s currency, the yuan, which might restrain exports by making its goods more expensive.Nampa-AP