China has taken measures to "cool down" a possible overheating economy, and Chinese investment growth would likely fall by nearly half to around 16 percent annually in 2004 and 2005, a research report issued by the Asian Development Bank (ADB) forecast Wednesday in Beijing.

The "Asian Development 2004" report pointed out that high housing prices and a tightening of bank lending for real estate will cool down property investment, and China would also formulate regulations to limit investment in automobiles, iron and steel, aluminum and cement industries, which would help curb the investment heat.

In addition, the foreign direct investment in China would grow moderately, the effective control of the rapid increase of bank credit and the gradual phase out of the expansionary fiscal policy would also contribute to the slowdown of the investment growth, the report said.

The ADB also predicted in the report that China's rapid economic growth would continue in 2004 and 2005. After 9.1 percent growth in 2003, the country's economy could grow by about 8.3 percent in 2004 and 8.2 in 2005.

China's GDP growth in 2004 would account for 15 percent of the expected expansion in the world economy, even though China had only about four percent of global GDP, the ADB added in the report, explaining the country's robust economic performance reflects substantial reforms associated with World Trade Organization accession and the accumulated impact of the positive fiscal policy during the past six years.

Exports in 2004-2005 will continue to rise, but at a slower rate of around 15 percent a year. However, the strong domestic demand, especially for oil, steel, grain and raw materials, would be the major engine of import growth, the ADB report said, forecasting China's import growth rate, while somewhat lower than that in 2003, will be in the order of 16 to 20 percent and exceed the increase of exports in 2004 and 2005, resulting in a lower trade surplus.

The ADB also considered Chinese consumption growth would accelerate slightly to around nine percent and the rise in the Consumer Price Index would likely accelerate moderately to 2.7-3.0percent during the period of the time.

China has taken steps to rein in credit expansion and is emphasizing a more balanced pattern of economic growth, with additional help for rural areas and more emphasis on social development, said Bruce Murray, ADB resident representative in China, in reply to a reporter's question.

He said the measures that China has taken were in line with concerns about potential economic overheating and unbalanced socioeconomic development, advising that fiscal measures would be needed to complement monetary policies that had been used to try to control a surge in investment and potential overheating in some industrial sectors.