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Yellow light warning for Chinese economy
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17:01, November 06, 2007

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China's macroeconomic performance index rose four points from August to hit 121.3 points in September, with some sectors entering the red and yellow light zones, meaning they are going a bit too fast, according to the National Bureau of Statistics (NBS).

The macroeconomic performance index pre-warning chart published by NBS Tuesday show that the overall index was marked by a yellow light, with two sectors, the industrial output and fiscal income, entering red light zones. The industrial output was for the first time labeled red after lingering at the yellow light zone for seven months in a row.

"This year, the industrial sector has been boosted by robust export demands and the fast development of the real estate industry, while the investment and output of iron and steel, nonferrous metals and cement industries was heated," said Wang Xiaoguang, a macro-economist with the Institute of Economic Research of the National Development and Reform Commission.

Two other sectors, namely residents' disposable income and consumer prices, were in the yellow light zone, while the remaining sectors including fixed asset investment, consumer goods sales, foreign trade, profits from industrial enterprises, loans by financial institutions and broad money supply (M2) were all in the green light zone, indicating that they are stable.

In a separate release, the NBS said that the September consumer confidence index was down 0.3 points from August to 97, indicating that consumers are less optimistic about economic prospects.

The macroeconomic performance index published monthly by the NBS reflects trend of the country's economy, the index for September is the latest.

"The government is and will be taking measures to tackle the slightly overheated economic trend, including curbing credit growth and rein in excess investment to cool the country's booming economy," said Wang.

Wang also predicted a possible interest rate rise by the end of this year. In support of his prediction he said that the actual interest rate is relatively low as the country's consumer price index (CPI), a key inflation indicator, rose by 4.1 percent in the first nine months over the same period last year.

Source:Xinhua



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