Bank acts to tackle overheating

China's industrial production in May grew by 13.7 per cent from a year earlier, the slowest growth rate in nine
months. The downturn reflected the impact of Sars, which caused some factories to shut
temporarily, and hit sales as consumers stayed at home to avoid possible
infection.
Retail sales in May were 4.3 per cent higher than in the same month last
year, according to National Bureau of Statistics figures. This was the lowest growth rate
in live years and was also a consequence of the Sars outbreak, with especially severe falls
in restaurant spending. However, there were -increases in spending on medicine and
sterilising equipment and on cars.
China's M2 measure of money supply rose by 20.2
per cent in May, higher than a target level of 18 per cent and its quickest rate of growth since
August 1997. In response to concerns about a possible overheating of the economy, the
People's Bank of China said it would flexibly pursue many kinds of monetary policy tools
and increase the strength of market operations' to control money supply.