The Bank of China said the government may look to introduce more macroeconomic controls in the second half of the year to cool an apparent economic overheating, the Shanghai Securities News reported. In the bank’s monthly monetary market report, the bank said that most macroeconomic indicators pointed to continued rapid growth during the first half of this year, predicting GDP would increase 11.3% this year, beyond the central bank's expectation of 11%. Likely measure included rate hikes and the cancellation or reduction of taxes on bank interest. The bank added that increases in the price of agricultural products, rebounding oil prices, resource price adjustment and the "wealth effect" of the stock market were probably the main pressures driving the consumer price index (CPI) to 4% in June.

Climbing staple food prices could drive inflation above the Chinese government’s 3% target for 2007, the China Securities Journal reported. The Consumer Price Index (CPI) is projected to jump around 3.3% this year, according to the State Information Center. Food prices representing one-third of the CPI indicator have climbed 8.3% compared to the same period last year, largely due to higher costs for raw materials such as feed. Egg prices skyrocketed 37.1%, while meat and poultry prices soared 26.5%. However, improved productivity kept industrial sector costs steady, counterbalancing some of the inflationary pressure from food.

Chinese companies are looking offshore to meet the country’s voracious appetite for natural resources. As China Business News reports, they are meeting with more failure than success. Consolidation and greater government support is needed.

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