Economic Officials Warn of Overheating Sectors

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Last updated at: (Beijing Time) Saturday, April 19, 2003

Economic Officials Warn of Overheating Sectors

Pumping more capital into some industries may actually make them run the risk of over-investment and over-production, senior economic officials warned.

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Pumping more capital into some industries may actually make them run the risk of over-investment and over-production, senior economic officials warned.

Ou Xinqian, vice-minister of the State Development and Reform Commission (SDRC), said curbing over-investment in some sectors topped the government's economic agenda during the coming months, but added that all the economic indicators remained encouraging.

She said the government will closely monitor over-investment in and over-production of steel, cars and electrolytic aluminium.

"Investment in these sectors is too high and we should let the market players know about this,'' Ou told Friday's press conference, the first one since the SDRC was set up last month, assessed China's development during the January-March period.

Overall economic indicators are positive, with 9.9 per cent year-on-year gross domestic product (GDP) growth, and total industrial output amounting to 834.3 billion yuan (US$100.5 billion) in the first three months of 2003, achieving a year-on-year increase of 17.2 per cent.

The GDP and industrial output rates of increase are the highest since 1997 and 1995 respectively.

The achievements were announced by Ma Liqiang, director of the SDRC's Bureau of Economic Operations.

Ma said six major industries -- telecommunications, computers, electronics, transportation equipment, textiles and mechanical equipment -- led the fast rise in industrial output.

During the January-March period, the output of electronics equipment and telecommunications products such as computers and mobile telephones rose more than 40 per cent compared with last year.

During the period, exports handled by the industrial sector reached 514.6 billion yuan (US$62 billion), a year-on-year increase of 30.2 per cent.

Industrial output is an important indicator of China's economic development as it accounts for about 60 per cent of the nation's gross domestic product.

Director Ma also agreed Ou's view that in several sectors, over-investment was taking place, despite the nation's overall sound economic outlook.

For example, car production rose year-on-year by 120 per cent to 399,000, while output of all types of vehicles rose 54 per cent to 1.05 million.

According to Ma, car assembly lines can be found in 23 provinces, autonomous regions and municipalities.

Ma said the government is considering industrial policies to support the healthy development of the industry.

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