International Monetary Fund issued the spring report on the world economic forecast on Apr. 13, which read that China's GDP this year will grow by 8.5 percent, and 8 percent next year. However, the economists have warned China against the over-heated domestic and inferior domestic investment.

"The percentage of the total investment in China last year against the GDP reached a rocket high of 45 percent, and IMF keeps a close watch on the quality of investment in China, maintaining the improvement of investment quality is vital to the reform of financial system and public enterprises," said one chief economist with IMF at the press conference.

Although the inflation rate in China remains low at present, the IMF report held that the cost pressure in China is on the rise, including the increase of salary and the lack of energy, the short of power supply in particular.

The report noted that China should further tighten its monetary policies so as to bring the over-heated investment under control. The more flexible foreign exchange policies will also be conducive to the control over investment. Meanwhile, China should also keep the tight fiscal policies and control the pressure from demand. The reporte reiterated the deepening of reform in China's financial system and public enterprises is of crucial importance, but the labour market in China needs to be more flexible.

IMF report also pointed out that the ban by the developed counties on Chinese textile products will distort the world market, and the decrease of Chinese textile will be quickly made up by those from south Asian countries.

By People's Daily Online