China will take more steps to curb investment and lending, Premier Wen Jiabao said, as the government tries to stop the world's fastest-growing major economy from overheating.
The country will further regulate real estate, Wen told the annual meeting of the National People's Congress in Beijing.
China needs to prevent cash from the country's record trade surplus from stoking inflation and raising the risk of asset bubbles and investment in unneeded factories. The economy accounts for about a tenth of global growth and expanded by 10.7 percent in 2006, the fastest pace in 11 years.
The government is "focusing more on the quality of growth than the pace of growth," said Isaac Meng, senior economist at BNP Paribas Securities Asia in Beijing. "How to cool down real estate and dampen property prices remains a key focus."
Wen reiterated the target in China's five-year plan of 8 percent annual growth in 2007. His speech mostly restated existing policies. The government will control excess liquidity and further boost domestic consumption, Wen said.
China's growth targets are "regularly set and regularly exceeded," said Stephen Green, senior economist at Standard Chartered Bank Plc. in Shanghai.
China is trying to reduce a reliance on exports and achieve more balanced growth. The boom in overseas sales pushed foreign exchange reserves to $1 trillion and created tension with trading partners. China's exports are cheap because the yuan is kept weak, U.S. and European manufacturers and lawmakers say.
The central bank raised interest rates in April and August and last month ordered banks to set aside more money as reserves for the fifth time in eight months, seeking to prevent an overheating.
Investment growth in the first two months of this year is likely to trigger a rise in rates, Green said. Eleven of 14 economists surveyed by Bloomberg News in January predicted the central bank will raise its benchmark rate in the first half from 6.12 percent.
China's property prices rose faster in January, led by roughly 10 percent growth in Shenzhen and Beijing, confounding government attempts to slow gains. China's stocks have this year touched record highs and also slumped by the most in a decade, raising concern about bubbles.
"We want growth to be slower, but it's not sure whether we can achieve 8 percent," central bank Governor Zhou Xiaochuan said Feb. 9.
China's 2006 trade surplus ballooned by 74 percent to $177.5 billion. The U.S. trade deficit with the nation reached a record $232.5 billion.
Consumer prices rose more quickly in December and January than in the previous 20 months, with increases of 2.8 percent and 2.2 percent respectively. Central bank assistant governor Yi Gang said last month that the government is determined to fight inflation this year.
Investment and lending may rebound, increasing the risk of accelerating consumer price increases, the People's Bank of China said in February. China's new yuan lending last year totaled 3.18 trillion yuan ($410 billion), overshooting the bank's target by 27 percent.