Growing Fears That Chinese Economy is Overheating

17 May 2004

China's annual rate of inflation hit a seven-year high in April, according to the State Statistical Bureau.

The figures heightened concern that the economy is overheating with consumer prices rising 3.8% year-on-year.

Food prices jumped 10% last month and the cost of grain soared by more than a third.

Beijing has taken steps to rein in inflation by capping utility costs and limiting lending by state banks.

Some economists forecast that interest rates will rise for the first time in nine years as policy makers try to cool growth.

At the same time they warn that a slowdown in China's economy may have global repercussions.

Premier Wen Jiabao has expressed concern. During his recent European tour, Wen described China's growth as "excessive".

China is the world's sixth largest economy and fourth biggest exporter.

Its appetite for raw materials has pushed up prices worldwide. In 2003 it consumed 27% of world steel, 31% of coal and 40% of cement.

Data sourced from: BBC Online Business News (UK); additional content by WARC staff