The rapid expansion of investments and inflation are among the top problems facing China’s economy, according to the Economic Development Revolution Committee. The revelations came in a recent Beijing Economy Daily article. Other problems outlined in the article include the number of large loans and a shortage of coal.

The article points out that as the Mainland China economy grows rapidly, some serious issues have not been effectively resolved and others are still developing.

Investments have expanded extraordinarily fast. In the first quarter of the year, the ratio of social investments to capital assets increased 43 percent, and the amount of investments increased 15.2 percent. The growing trend of blind investment by industries has not been curbed. Real estate speculation also continues to grow rapidly, while local investment, especially in coastal areas is booming. Investments in Eastern areas increased 47.8 percent, making up 64.2 percent of investments nationwide.

Secondly, loan size is still relatively large. At the end of March, loans approved by Guangyi Money Supply increased 19.2 percent, which is a 0.7 percent increase from the same term last year. In the first quarter, loans from financial institutions increased 83.4 trillion yuan, which changed the downward trend since the fourth quarter of last year, in which there was only a 23.8 billion yuan increase. Foreign exchange loans have continuously and rapidly increased. In the first quarter, new loans reached 9.4 billion U.S. dollars, which is an increase of 4.2 billion U.S. dollars over last year.

There are also shortages of coal and electricity generated from coal. During the first quarter, electrical power production increased 15.7 percent, yet generation equipment was continually overloaded. The rate of coal-generated electricity used per hour has reached higher levels than all past years, even though there are still 17 provinces where electricity usage is limited, and Eastern and Southern China seriously lack electricity. In the first quarter, production of coal increased 14.4 percent, but still could not keep pace with the growing demand.

Finally, pressure from inflation has increased. The general price of goods increased 2.8 percent last year. Food prices went up 4 percent. Moreover, the international market has increased the domestic production cost of products like mint, aluminum and cotton.

Among the measures that can be undertaken to address the economic problems are stricter control of new industrial projects and using a different monetary policy to strengthen loan administration and effectively control the increase of loans.