China to tighten monetary policy, curb inflation

The domestic economy is likely to keep pace with the growth achieved last year, Ma, director of the National Development and Reform Commission, said at the China-Japan economic summit in Beijing Saturday. China’s economy grew 11.1 percent in 2006.

The nation’s Politburo said on Nov. 27 preventing the economy from overheating will be a key goal for 2008. The Communist Party’s ruling council wants to cool surging investments that may leave the country with idle factories and bad loans if a global slowdown curbs demand for exports.

“China’s economy is still seeing accelerated investment growth, a widening trade gap, rising pressure in higher product prices and over-lending,” said Ma, whose comments were posted on the Commerce Ministry’s Web site. “The government is clearly aware of these problems.”

The nation will use a combination of monetary policy measures to step up lending controls and ensure steady and balanced growth, Finance Minister Xie Xuren said at the same economic summit Saturday.

“We will continue to take gradual steps to increase the flexibility of the currency exchange system and strengthen the independence of the currency policy and adjustment mechanism,” Xie said in comments on the ministry’s Web site.

China wants to curb overcapacity in energy-intensive and polluting industries and to ensure better co-ordination in the supply of goods in the market to keep product prices from accelerating too quickly, Ma said.

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