China's Economy to Grow 7% to 8% in 2004

Byzjx

Updated Mon, 06 Sep 2004 00:00:00 GMT

China's economic growth may slow to between 7 percent and 8 percent this year as the government limits investment in industries including steel and cement.

``We need to control certain sectors that are overheating such as steel and cement, while we need to increase investment in others,'' Li said in an interview in Santiago, Chile, where he was attending a meeting of Asia-Pacific finance ministers. ``With this kind of adjustment, we can achieve an appropriate growth rate.''

China's economy, the second-largest in Asia after Japan's, grew 9.6 percent from a year earlier in the second quarter, slowing from growth of 9.8 percent in the first three months of the year.

The government is trying to cool the pace of growth, which has stoked inflation and has caused transport bottlenecks and shortages of electricity. China set an economic growth target of 7 percent earlier this year.

The government wants to encourage investment in transportation, power generation and agriculture, Li said. China has loosened some investment restrictions, aiming to encourage banks to continue lending to projects more likely to be profitable and to avoid an increase in unemployment.

The China Banking Supervisory Commission said in an Aug. 3 announcement that commercial banks should step up lending to private businesses, the biggest source of new jobs.

China's industrial production rose 15.5 percent in July, the slowest pace in a year. Inflation reached a seven-year high of 5.3 percent in July.