China may raise interest rates amid concerns that measures taken so far are not enough to cool the economy, Vice Finance Min-ister Lou Jiwei (
"We expect that monetary policy controls will be further enhanced to continue control over the macro-economy but if they are slow to take effect, macro-economic policies will be strengthened," he told a conference in Beijing.
Speaking to reporters later, Lou said the stronger measures he was referring to could include an interest rate hike.
His remarks were the latest in a series of indications that an interest rate rise remains an option under serious discussion in the Chinese leadership to curb the country's investment-led growth.
Central bank governor Zhou Xiaochuan (
China last raised local currency lending rates nine years ago but a growing number of experts believe it may soon be necessary to do it again.
China's economy expanded by 9.8 percent in the first quarter of the year and prices are now rising at their fastest tick in seven years.
A dramatic slowdown is not expected in the near future and a think tank attached to the Chinese commerce ministry said yesterday the economy would probably grow by "more than" 9 percent in the first half of this year.
The frantic pace of growth has led to bottlenecks in key sectors such as transport and energy, while over-investment is seen in industries such as steel, cars and real estate.
The government has so far taken a cautious approach, twice raising the deposit required reserve ratio, meaning lenders must place larger amounts of money with the central bank, which reduces the amount of funds available for lending.
However, Lou suggested in his speech at the conference that it may be too little to halt the growth juggernaut.
"The macroeconomic tightening policies taken by the central government have shown a little effect," he said.
"The April economic indicators are better than in the first quarter but the measures have yet to resolve the overheating problem," the vice minister said.
In one indication that growth is slowing slightly, investment in fixed assets last month rose 34.7 percent, down 8.8 percentage points from March.
Across the Pacific, US Treasury Under Secretary John Taylor said there was no serious risk of overheating because "the Chinese are beginning to take action" to address it.
"It's not so much about how to slow down growth in China," hetold a press conference in Washington on Thursday. "It's just being sure that there is not a pickup of inflation in China."
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