The Chinese government has pledged that it does not intend to apply the fiscal brakes, despite growing inflationary pressures in certain sectors of the Chinese economy.
“A stable fiscal policy suits China’s changed economic situation. It’s inadvisable to put a sudden brake on fiscal policy and tighten the policy in an all-round manner,” Finance Minister Jin Renqing said in an interview with the state media agency Xinhua on the sidelines of the Asian Development Bank meeting.
Nonetheless, Jin recognised that investment was beginning to overheat certain areas of the Chinese economy, particularly property, steel and cement production.
“Investment in some sectors is growing too fast and the problem of duplication of investment is serious and striking,” he observed. “The inflationary pressure still exists.”
Jin went on to explain that the government would implement a fiscal policy that supported weaker sectors and curbed investment in fast growing ones.
He also reaffirmed plans to cut the fiscal deficit-to-GDP ratio to around 2 percent in 2005 from 2.5 percent last year.
Recent figures show that the Chinese economy grew by 9.5% in the year through to the end of the first quarter.
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