China's GDP growth is expected to be 10.4 percent for the first six months of the year, according to a National Development and Reform Commission (NDRC)report.

This follows a report at the end of the first quarter which said that the GDP was up 10.3 percent.

But the report highlighted excessive lending and investment in the past six months, warning a new bout of over-investment would be damaging in the long term.

Over-investment could influence the stable growth of China's economy, said the report. It continued to say the central government should follow a stringent monetary policy to prevent over-investment by local governments, the rapid growth of money supply and lending, over-production in some industries like steel, cement and aluminum, and soaring house prices in certain regions in China.

The report said that the central bank's move to raise the benchmark lending rate by 27 points in late April and the recent 0.5 percent rise of the reserve ratio for commercial banks were not enough to curb the excessive lending.

A mild increase in the interest rate for both deposits and lending is suggested by the report, with the rate to go up by 0.25 percent for each round of adjustment. This will not only help to restrain oversupply in both money and products like steel, cement and others, but also leave more space for further economic readjustment in the future.

Following these macro control measures, the NDRC expects China's economic growth to maintain the healthy trend of high growth rate and low inflation this year, with the GDP for the whole year expected to be up 10.2 percent.

Source: Xinhua