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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (7743)	3/28/2007 6:44:57 PM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Chinese economist warns on risks of overheating Wednesday, March 28, 2007 4:53:39 AM (GMT-06:00) Provided by: Reuters News BEIJING, March 28 (Reuters) - China's economy is seeing greater risks of overheating, necessitating further steps by Beijing to keep the world's fourth-largest economy from running out of control, a government economist said on Wednesday. Chen Dongqi, vice-president of the Academy of Macroeconomic Research, told a forum that the economy showed few signs of slowing and that the annual growth rate for the first quarter would probably exceed the pace of 10.7 percent in all of 2006. Inflationary pressures were also growing, Chen said, forecasting a 2.5 percent rise in the consumer price index in the first quarter. Annual consumer inflation picked up to 2.7 percent in February, from 2.2 percent in January. "I agree that the economy has yet to become overheated overall at present, but I might change my mind if the situation continues like this," said Chen, whose think-tank is affiliated with the National Development and Reform Commission (NDRC), the powerful economic planning agency. "The pressure is getting stronger, and action should be taken as quickly as possible to keep the risks from accumulating," he said. The central bank has raised banks' reserve requirements five times and increased benchmark interest rates three times since last April to rein in credit and investment. Beijing has also introduced a range of other measures to cool growth, including getting tougher in approving new investment projects. Chen suggested that the People's Bank of China step up its efforts at soaking up liquidity by issuing more bills and further increasing banks' required reserves. He also said more cuts in tax rebates for exports of polluting and energy-intensive products would help authorities temper economic growth.