(chinadaily.com.cn)
Updated: 2007-07-05 10:25

In view of evident signs of economy overheating in the first half this year, thegovernment should, in the second half, tighten macro controls on the interest rate,foreign exchange rate,tariffrebate, labor cost, and land and other resources costs, to curb excessive growth of investments and export and bring assets prices under control, proposed a report from the macro-economic research group of the State Information Center.

The report said that the growth rate of China'sgross domestic product(GDP) for the entire 2007 may reach 10.9 percent, slightly higher than last year's GDP growth. However, the growth of the overall economy may slow down in the second half of this year as compared with the first half.

According to the report, the nominal growth rate of totalretailsales of consumer goods for 2007 is expected to be 15.8 percent, an increase of 2.1 percentage points from last year's growth rate. The whole country'sfixed assets investment will grow by 24.2 percent, 0.2 percentage points higher than last year's growth. The total exports will increase by 26 percent, and imports will increase by 19.5 percent. Trade surpluses will reach US$275 billion, up 55 percentyear-on-year. Industrial added values will rise 17.6 percent, one percentage point higher than last year's growth rate. Theconsumer price indexwill rise by 3.3 percent.

Related readings:  Central bank to apply consistent, moderate tightening policies  Macro economic climate index stable in May  Central bank: CPI to grow 3.2% in 2007  Economy to sustain fast growth for 2 more decades

The report proposed more fiscal supports to the country's structural adjustment. It also proposed a mix of monetary policies, such as accelerating yuan appreciation, interest rate and reserve ratios hikes, and suspending the interest tax, to increase capital cost of investments.

The government should also encourage energy conservation and emission reduction through measures of pricing, taxation and market entry, according to the report.