Print

Mail

wiki links

Wen calls for immediate action to calm economy

China's premier has called for urgent steps to prevent economic overheating, state media reported yesterday, highlighting 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 (溫家寶) said on Wednesday in a teleconference with officials nationwide, according to news reports.

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.

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.

NEW MEASURE

In a new measure to rein in real estate speculation, the government said it would impose a capital gains tax of 1 percent to 3 percent from next Tuesday 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.

Separately, Standard and Poor's said yesterday that it had raised its long-term sovereign credit ratings for China to "A" from "A-" based on a strengthening banking sector and continuing economic liberalization.

The international ratings agency said the outlook was stable amid expectations that China would maintain macroeconomic stability while it continued with its economic restructuring.

"The upgrade on the ratings on China reflects its persistent efforts to strengthen the banking sector that will reduce the future fiscal burden, as well as China's continuing economic liberalization and reform that will further entrench excellent growth prospects," said Ping Chew (周彬), a credit analyst with Standard and Poor's sovereign ratings group.

The ratings service said that it had lowered its estimate of non-performing assets in China's financial system to 21-25 percent of total loans by the end of last year, with the ratio expected to decline further.

It did not give its original estimate for non-performing assets.

RISING REVENUE

China's rising budgetary revenue should reach more than 20 percent of GDP this year, while its deficit should fall to less than 1 percent of GDP, it projected.

Standard and Poor's said it expected to see "ongoing efforts" to moderate growth in the economy, which expanded 10.9 percent in the first half of this year.

"More lending rate hikes and monetary tightening, including gradual appreciation of the renminbi [yuan], are expected," it said.
This story has been viewed 1142 times.