Premier Wen Jiabao warned the economy was in danger of overheating in a conference call with local officials Wednesday and urged local authorities to heed central government macroeconomic control measures. The premier identified rapid growth in fixed-asset investment and bank lending, growing imbalances in international payments, escalating energy consumption and environmental degradation as major risks. The economy grew by 11.3% in the second quarter, the fastest in 12 years, while fixed-asset investment grew 31.3% in urban areas in the first six months of the year. The central government has twice raised commercial banks' reserve-requirement ratios in the last two months to soak up excess liquidity, and increased lending rates slightly in April. However, it faces an uphill battle to cool the economy in the face of overzealous regional authorities chasing growth at any cost.
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