INDUSTRIAL output is expected to rise at least 21.8 per cent this year to reach 4,255.2 billion yuan (HK$3,816 billion), according to a report from the State Information Centre (SIC) quoted in the China Daily.
But the SIC experts warned that inflation - the biggest enemy facing the Government - would continue to wreak havoc on the economy as price rises for the whole year would probably average 18.8 per cent, almost double the official target set by the Government.
These estimates were made assuming interest rates did not change this year and the national currency, renminbi, remained strong.
The experts suggested that the Central Bank should raise interest rates to attract savings and ease the public's fear of inflation.
But Central Bank officials have rejected the suggestion as infeasible. They said any increase of deposit rates would have to be matched by a corresponding increase in lending rates.
This would eliminate any chance of survival for the inefficient state sector which already owed the banks billions of yuan - much of which would not be repaid.
