Beijing would introduce further measures to cool the economy in addition to the one-year lending rate rise announced by the central bank on Thursday, leading economists said yesterday.
Morgan Stanley managing director and chief economist Stephen Roach said the rate increase alone would not be enough to rein in growth.
'I think it's the first step,' Mr Roach said. 'There are signs from Beijing that there will be additional follow-up measures either through administrative controls on projects or industry-specific restrictions on lending, and possible further actions by the [central bank].'
Mr Roach said investment in fixed assets in urban areas was too high. The Chinese Academy of Social Sciences warned this week that fixed-asset investment could reach the equivalent of 52.7 per cent of gross domestic product this year.
Investment in fixed assets, such as roads and factory equipment, grew by 25.7 per cent last year to 8.86 trillion yuan - the equivalent of 48.5 per cent of GDP.
The People's Bank of China lifted its benchmark one-year lending rate by 27 basis points to 5.85 per cent on Thursday. The first rate increase since October 2004 was part of a series of credit-tightening measures implemented over the past week to curb explosive economic growth.