BEIJING -- China warned that it must act to keep its economy from overheating and said it will take a multipronged approach rather than rely on just one policy tool. China must better coordinate trade, foreign investment, foreign-exchange, monetary, fiscal, industrial and investment policies in addressing external imbalances, the State Administration of Foreign Exchange said. And the National Development and Reform Commission, an agency under the State Council, China's cabinet, said China must take steps to prevent the economy from overheating, including cutting export incentives and limiting energy-intensive industrial expansion.
The remarks add to increasing expectations that policies will soon be introduced to cool growth. They come a week after data showed gross domestic product, or the total value of goods and services produced, expanded at a stronger-than-expected 11.1% in the first quarter from a year earlier, increasing from 10.7% a year earlier. The comments also come just a few weeks before Vice Premier Wu Yi flies to the U.S. for the Strategic Economic Dialogue between both countries. Those talks will renew focus on Beijing's efforts, unsuccessful so far, to stem China's growing trade surplus, or the margin by which exports exceed imports. Many countries, including the U.S., have called on Beijing to let the Chinese currency appreciate at a faster pace to address the trade imbalance. But China has said repeatedly that the role of the yuan in addressing the surplus shouldn't be overestimated.
"The impact on the domestic economy from the international balance of payments situation is becoming ever larger," Li Dongrong, a deputy administrator at the State Administration of Foreign Exchange, said on the regulator's Web site. The central government recognizes that "fostering a basic balance of international payments is among the key tasks in maintaining macroeconomic stability," he said. China must improve its controls to keep its economy from overheating, said Zhu Hongren, deputy director of the bureau of economic operations at the National Development and Reform Commission. "China's first-quarter economic growth is still in a relatively fast growth range," he said at a news briefing Thursday.
Mr. Zhu said the commission would curb growth in energy-intensive industries and their exports and would reduce rebates in the export sector, including those for low-end processing goods. He didn't detail the controls or say when they would be put in place.
China's economic expansion continues to be underpinned by massive export-driven inflows and excessive fixed-asset investment, causing oversupply in some sectors, like housing and construction. The central bank is also struggling to control flush liquidity and rising inflation. In March, China's consumer-price index, an inflation gauge, rose 3.3% from a year earlier, exceeding the government's target to keep it under 3% this year.
