MercoPress. South Atlantic News Agency

China preparing to cool overheated economy.

Stock markets across Asia suffered this week the impact of Chinese Prime Minister Wen Jiabao words anticipating that China was preparing steps to cool the economy that has been growing at a nerve breaking pace.

China's economy among the world's fastest growing for some time reached a GDP expansion of 9,1% in 2003, with many analysts stating that this extraordinary success is responsible for having turned commodities into an ever increasing bull market?so far.

Mr. Wen Jiabao cautionary statement follows an official release saying that investment in fixed assets such as industrial machinery and construction had been rocketing at 43%, obviously increasing fears of an economy overheating.

"We've had a sell-off in the China stocks, particularly those that have been very hot, cement, automobiles and so on", said broker Howard Gorges from South China Brokerage in Hong Kong where some of the best performing Chinese stocks this year have lost 35/40% of their value in the last two weeks.

Mr. Wen Jiabao also warned that Beijing's immediate priority was sorting out the investment boom and the banking system submerged by massive bad debts from underperforming state companies.

This was seen as a clear message to the United States that has been pressing China to float its currency, the yuan, pegged to the US dollar, and which US Congressmen, industry and unions blame for the ballooning trade deficit and loss of jobs.

It is believed some of the first decisions from Beijing will be to restrict lending and tighten land use rules to slow industrial developments.

US Federal Reserve chairman Alan Greenspan recently cautioned about insisting on China to change its currency policy, given the "fragility" of its banking system.