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China's Central Bank Pledges to Prevent Economy from Overheating

Chinese central bank said on Wednesday it would put the task of preventing the national economy from overheating as the top priority of current macro control.

The country's economy has recorded a stable and fast growth in the first half, and it is highly possible it would maintain a high growth rate in the second half under the favorable conditions, said the People's Bank of China in its second-quarter monetary report.

However, it pointed out there was a more obvious trend for the economy to shift from fast growth to overheating.

The expanding trade surplus and rapid growth of bank loans and investment remained big challenges to the economy, it said.

China's GDP expanded 11.9 percent in the second quarter this year, lifting first-half growth to 11.5 percent, the National Bureau of Statistics announced in July.

The central bank said it would continue to implement the prudent monetary policy in the second half and would call into necessary macro control measures to maintain the stability of the country's financial situation.

It also pledged to take measures to control the inflationary expectations and maintain the price stability, according to the report.

The bank said it would continue to address the excessive liquidity with open market operations and reserve requirement ratio and also with the creation of more hedging instruments.

The central bank would let the market supply and demand play a bigger role in determining the yuan exchange rate and make it more flexible while maintaining the stability of the currency's exchange rate at a reasonable and balanced level, said the report.

(Xinhua News Agency August 9, 2007)

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