MercoPress. South Atlantic News Agency

China raises interest rates to cool economy

China which has become a leading world economy and exporter has raised interest rates for the second time this year in an effort to cool its booming manufacturing and construction sectors.

With the economy expanding at 11.3% in the second quarter, China's Central Bank increased the main lending rate to 6.12%, up 0.27%.

The People's Bank of China also increased the main deposit interest rate by 0.27%, and now stands at 2.52%.

"It's necessary to use interest rates as a lever to curb investment and demand for credit while mopping up liquidity," said the central bank.

The last increase in the lending rate, also by 0.27%, was in April. China is keen to keep inflation in check, as it fears a big upsurge could spark a financial crisis. Chinese Prime Minister Wen Jiabao said recently that officials must "resolutely control" the surging investment boom.

China's economy is forecasted to become the world's largest by 2020, ahead of United States. China's GDP already represents 15% of world GDP at purchasing parity; in 1980 it was only 3.5%.

China has also become the world's main importer of many commodities such as copper, soybeans and oil and its overall international trade represents 9.5% globally.