China alert on trade gap
(IHT/Bloomberg)
Updated: 2006-10-31 14:32
http://www.iht.com/articles/2006/10/30/business/chinecon.php
China
must narrow its trade imbalance while curbing growth in investment and lending,
Ma Kai, the country's top economic planner, said Monday, as the government works
to keep the economy from overheating.
The nation's trade surplus surged
to $109.9 billion in the first nine months of this year, exceeding last year's
total. The Commerce Ministry expects the gap to widen to $150 billion in
2006.
Macroeconomic controls "will be focused on reducing investment, the
supply of credit and the favorable balance of trade," Ma, head of the National
Development and Reform Commission said at a conference in Beijing.
A boom
in spending on factories and real estate, fueled by credit, drove economic
growth to 11.3 percent in the second quarter from a year earlier, the fastest
pace in more than a decade. A series of curbs on lending, land and new project
approvals since June helped cool growth to 10.4 percent in the third
quarter.
Prime Minister Wen Jiabao calls the soaring trade surplus one of
China's biggest economic problems because it has strained trade ties with the
United States and flooded the Chinese economy with cash, complicating the
efforts to slow investment. The gap, which China aims to close by 2010, is
adding pressure on the nation to let its currency gain faster to stem money
inflows.
"Overinvestment and overcapacity in manufacturing have had a
negative impact on China's banks," said Guo Shuqing, chairman of China
Construction Bank, said this month.
Imports into China, the world's
third-largest trading nation, may exceed $1 trillion by 2010, Ma said. Chinese
demand for overseas goods rose 17.5 percent to $660 billion in 2005. In addition
to allowing "gradual" increases in the yuan's value, the government has pledged
to curb exports and bolster imports to address the imbalance.
On average,
China's economy may expand at an annual rate of more than 7.5 percent over the
next five years, Ma said.
A copy of his speech made available earlier
said that growth would average 7.5 percent, a guideline set out by the
government in its latest five-year plan covering 2006 to 2010.
Inflation
in China as measured by the consumer price index has not exceeded 2 percent
since March 2005 and is the fourth-lowest among 16 Asia Pacific economies
tracked by Bloomberg.
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