China's government will step up its lending curbs and investment restrictions because industrial expansion by state companies has yet to be reined in sufficiently, Vice Premier Zeng Peiyan (曾培炎) said.
"We must increase structural adjustments," Zeng said in a speech to the World Economic Forum's China Business Summit in Beijing. "Macroeconomic adjustments have been effective, but these are just initial results. We can't relax the campaign."
China's industrial production growth picked up last month for the first time in six months, the government said Friday, suggesting lending curbs are having less of an impact. Inflation, which may be reported today, is forecast to have accelerated from a seven-year high, a Bloomberg survey showed.
"The government was too slow to implement measures to cool fixed-asset investment," Bruce Murray, chief representative of the Asian Development Bank in Beijing, said. "That's why the policies haven't been as effective as they might."
China has clamped down on lending to the steel, cement, real estate and other industries to cool an investment boom that it blames for causing power shortages, clogging transport links and driving up raw materials prices.
INVESTMENTS
China's investment in factories, roads and other fixed assets rose 32 percent from a year earlier last month, Wu Jinglian (
Zeng said the government will extend the loan crackdown to make it more difficult for state companies to expand. Authorities will continue to monitor investment in industries such as steel, autos and property, he said.
The central government plans to pare the number of business licenses and approvals required in an attempt to make the economy more market-oriented and reduce the influence of the state, Minister of the National Development and Reform Commission Ma Kai (馬凱) said at the forum.
Ma, who has berated local governments this year for fuelling "blind" and "haphazard" investments, said this year's slowdown in fixed-asset investment showed the government was right to use administrative measures to slow the economy.
"History will prove that this regulation avoided big ups and downs in the Chinese economy," Ma said. "We have to constantly enrich the content of macro regulation."
Interest rates
Economists including Qu Hongbin (
China should hold off from raising rates as higher borrowing costs may deter private investment, which is needed to drive economic growth and create jobs, said Cheng Siwei (程思危), vice chairman of the National People's Congress.
"We want to improve the effectiveness and efficiency of our investments," he said at the forum. "China doesn't want to slow economic growth."
Central bank Governor Zhou Xiaochuan (周小川) said last week that policy makers will decide whether to raise interest rates after reviewing last month's economic reports. China's inflation rate matches the People's Bank of China's one-year lending rate, which has been held at 5.31 percent since February 2002 and was last raised in 1995.
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