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Last Updated: Monday, 10 May, 2004, 05:36 GMT 06:36 UK
China orders utility price freeze
A builder in China takes a break
Construction has helped drive China's boom
China's government has told provinces that they must cap prices for utilities if local inflation starts to soar.

Local government must also compensate poorer residents whatever the inflation rate if prices for water, power and transport are raised.

The policy is the latest in a series of attempts by Beijing to take soaring economic growth off the boil.

Earlier in May, Prime Minister Wen Jiabao said he was readying "forceful" steps to calm the economy.

Surging investment in construction and other fixed assets such as industrial machinery has driven growth to 9.1% for 2003.

The first three months of 2004 exceeded even that, with expansion of 9.7% on an annual basis.

Prices are rising too as demand builds - up 2.8% in the same period, with food prices up 7.9% in March from the same month a year earlier.

The planned curbs on utility price rises will cut in where inflation tops 1% a month or 4% year on year for three months in a row.

They follow limits placed on lending by state banks - in other words, the banking sector in general, already hobbled by massive bad debts to underperforming state firms.





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