China's premier called for urgent steps to prevent economic overheating,
state media said Thursday as the government forecast more double-digit growth in
the next quarter, adding to pressure for new measures to avert a financial
"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" a
boom in construction and bank lending that drove growth in the second quarter to
11.3 percent, its highest rate in a decade, the People's Daily and other outlets
A construction site is seen in Changsha,
Central China's Hunan Province in this file photo taken in May, 2006.
On Thursday, the government announced new taxes on real estate sales in an
effort to discourage speculation.
Chinese leaders want to keep economic growth high in order to reduce poverty.
But they worry the investment boom could soar out of control, igniting inflation
or leaving companies and banks with dangerously high debts.
Growth should slow only slightly to 10.8 percent in the next quarter,
compared with the same period last year, the government's main planning agency
For the first nine months of this year, investment in factories and other
fixed assets should soar by 28.5 percent, the National Development and Reform
Commission said. That is close to the 29.8 percent growth rate reported in the
same period of 2005.
The government has tried to cool off the economy by raising interest rates in
April and restricting construction and credit. Economists say another rate hike
is possible, as is a rise in the value of China's currency, the yuan, which
might restrain exports by making Chinese goods more expensive.
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 of China 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, the government said it will start collecting a 20 percent capital
gains tax on property sales beginning August 1. The tax agency said the measure
was enacted in 1994 but has rarely been used.
The agency said it would impose a separate tax of 1 percent to 3 percent on
resales of residential property owned less than five years.
The announcement on the agency's Web site didn't say how the new tax would be
applied. China already charges a 5 percent tax on property sales after less than
five years of ownership.