China seeks to cool overheated sectors
(AFP)
Updated: 2006-05-07 09:57 It forecast growth of 8.9 percent for 2006.
Analysts said the decision to raise interest rates for the first time in 18
months was only the first in a series of measures aimed at preventing the
booming economy from overheating.
Chinese 100-yuan
banknotes. China's central bank is seeking to cool down overheating
economic sectors such as real estate as well as cut massive foreign
exchange reserves, a top government official
revealed.[AFP] | "We will make adjustments (in the interest rate) if it is appropriate. We
will gradually adjust the rate," junior finance minister Li said.
Li added that China's foreign exchange reserves had increased dramatically
and "personally I do not like that ... foreign exchange reserves will be reduced
to a certain extent." He did not say by how much.
China's foreign exchange reserves, the world's largest, hit 875.1 billion
dollars by the end of March, the central bank said.
"The forex regime is linked to a basket of currencies based on the demand and
supply of the market. The equilibrium is more appropriate when decided by the
market," Li said.
China abandoned its dollar peg last year and revalued the yuan upward by 2.1
percent.
Li warned that "the indigenous inertia of investment-boosted growth is still
strong and more sectors were plagued by overcapacity."
"The increasing price of primary products in the world market exerts a
mounting pressure on China's sustained and balanced economic development," he
added.
|