China Signals Economic Shift To Curb Overcapacity
BEIJING (AP) — China's economy strengthened in the first nine months of the year, the Cabinet said Wednesday, while signaling that the final quarter will see a shift to dealing with overcapacity and other problems of high growth.
The meeting of the State Council's executive members, chaired by Premier Wen Jiabao, came a day ahead of the release of official third quarter economic data on Thursday.
"In the first three quarters, the pace of economic growth quickened and demand structures have apparently improved," the State Council said in a statement. "At the same time, we also are clearly aware that there are still difficulties and problems in the economic and social development of our country."
The statement said China should manage expectations of inflation, though consumer prices fell 1.2 percent in August from a year earlier.
The Cabinet also said China will continue to implement its 4 trillion yuan ($586 billion) economic stimulus plan, but greater efforts will be made to curb overcapacity, promote new industries, maintain liquidity and lower unemployment.
Earlier this week, a top economic planner, Xiong Bilin, told reporters in Beijing that the growth rate for January-September would exceed 7 percent. But he noted that the stimulus package, which is focused mainly on construction projects, had also worsened China's chronic problems with overcapacity in important industries such as cement and steelmaking.
The government issued a notice Monday ordering tighter curbs on six industries: steel, cement, flat glass, coal chemicals, polysilicon and wind power equipment production. In a move to cut off financing for redundant projects, the country's mostly state-controlled banks were ordered not to lend to projects that violate government guidelines.
Economic statistics for September showed improving trade, housing sales, manufacturing and car sales. The data suggest that resilience in retail sales and industrial production are helping offset the blow from falling exports to China's economy.