China's premier called for urgent steps to prevent economic overheating,
state media reported Thursday, highlighting the increasing concern about keeping
the nation's soaring growth from igniting a financial crisis.
"We must take forceful measures to resolve prominent problems to prevent the
economy's rapid growth from turning into overheating," Premier Wen Jiabao said
Wednesday in a teleconference with officials nationwide, according to news
Wen, China's top economic official, told officials to "resolutely control" an
investment boom that drove economic growth in the second quarter to 11.3
percent, its highest rate in a decade, the Communist Party newspaper People's
Daily and the official Xinhua News Agency, among others, reported.
Chinese leaders want to keep economic growth high in order to reduce poverty.
But they worry that double-digit growth in investment and lending could soar out
of control, igniting inflation or leaving banks buried under dangerously high
The government raised interest rates in April to cool off the economy and has
imposed limits on construction and bank lending. Economists say another rate
hike is possible and have suggested the government might let the country's
currency, the yuan, rise in value, which would likely restrain its booming
Wen didn't announce any new initiatives, but called for more vigorous
enforcement of restrictions on construction and bank credit - the two factors
fueling the current boom.
The premier also called for more efforts to improve life for China's poor by
ensuring stable growth of farming and other industries in the countryside, home
to some 800 million people.
The Communist Party announced last week that the annual meeting of its
Central Committee in October will focus on building a "harmonious country" - a
reference to efforts to ease tensions over the growing wealth gap between
regions and social classes.
Meanwhile, in a new measure to rein in real estate speculation, the
government said it will impose a capital gains tax of 1 to 3 percent on August 1
on resales of residential property.
The announcement on the Web site of the government tax agency didn't give
details of how the tax would be applied. China already charges a 5 percent tax
on property sold after less than five years of ownership.