BEIJING, China (Reuters) -- China's economic indicators may have entered the danger zone, forcing the central bank to continue tightening steps to prevent the economy from overheating, a senior central bank official said in remarks published on Monday.
"Economic growth is overly fast and it has been so continuously," Zhang Tao, vice head of the international department at the People's Bank of China, the central bank, said in remarks published in the official China Securities Journal.
He noted the rapid rise of GDP, fixed-asset investment, inflation and lending, saying they "may have entered a dangerous zone."
He said China would continue to tighten monetary policy moderately in the second half of 2007 and apply a raft of measures to mop up liquidity.
These would include conventional money-market tools as well as the 1.55 trillion yuan in special treasury bonds the finance ministry plans to issue to the central bank in exchange for foreign currency assets to be managed by China's fledgling sovereign wealth fund.
Zhang said monetary policy needed to shift gears because some economic indicators had exceeded the government's initial targets.
GDP growth in the second quarter accelerated to 11.9 percent, the fastest pace since late 1995, while credit growth had reaccelerated to a fairly fast pace.
Industries that create a lot of pollution and use a lot of energy have also been expanding rapidly, calling for extreme vigilance by the authorities, Zhang added.
Separately, a senior government economist said China's consumer price index may rise 4 percent in 2007 because of rising food costs, but general overcapacity means inflationary pressure will remain mild. E-mail to a friend
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