China urged to rein in industrial production

China may see its economy further accelerate, posing even more challenges, if growth in its industrial output continues to speed up, the central government said yesterday.

To address the situation, China has to take more measures to rein in industrial production, which jumped 18.3 percent in the first quarter from a year earlier, the fastest pace for the same period in a decade, according to the National Development and Reform Commission.

"If the acceleration (in output) continues, it will not only raise economic growth, lead to over-consumption of energy and resources and increase pollution, but also make it more difficult to adjust economic structure, put pressure on economic stability and cause fluctuation in the economy," said Zhu Hongren, deputy director of the NDRC's economic operation bureau.

However, Zhu said second-quarter industrial output growth could be lower because of a relatively higher base in the second quarter last year. But intensive industrial consumption in the second quarter, a season of higher demand for manufacturing, could still lead to short supplies of coal, power and oil products in China, Zhu added.

Long-term factors such as efforts to advance industrialization and urbanization and short-term ones like robust demand from home and abroad and abundant supply of funds and electricity were cited as reasons for the rapid industrial output growth in the first quarter.

The NDRC, the mainland's top economic planning agency, also said the quick industrial expansion was a combination of a too-rapid increase in bank lending, the widening trade surplus and a rebound in fixed asset investment.

Zhu said growth in China's gross domestic product will be steady and will be relatively high in the second quarter. But he was quick to add that the quicker-than-expected GDP growth of 11.1 percent in the first quarter did not necessarily mean China's economy is overheating.

Goldman Sachs predicted last week that China may raise interest rates three times by the end of September after the country reported the quarterly GDP figure, up from a previous forecast of one hike. So far this year, China has raised the rate once, in March.

China will impose more measures over the coming months to restrain the growth, Zhu told a press conference.