China central bank warns of overheating

Beijing, August 8:

China’s central bank warned that growth in the world’s fourth-largest economy was moving towards overheating and vowed to do what it could to curb inflation.

“The economy is maintaining rather fast growth,” the People’s Bank of China said in its second-quarter monetary report.

“But it’s also necessary to pay attention to the fact that there is currently a clear trend for growth to shift from fast to overheated.” China’s economy expanded by a roaring 11.9 per cent in the second quarter from the same period in 2006, fuelled by a yawning trade surplus and massive investment.

China’s inflation rate was 3.2 per cent in the first six months of the year and jumped to 4.4 per cent in June, well above the government’s full-year target of 3.0 per cent.

“The current rise in prices is not caused by accidental or temporary factors. Rather, there is a rise in inflationary risk,” the central bank said, citing rising prices of meat and energy as major drivers.