BEIJING, June 23 (Reuters) - China said on Wednesday macroeconomic measures taken to cool its economy had yielded results but warned that investment growth rates were still "relatively" high.
The State Development and Reform Commission warned of upward pressure on prices and said grain inventories were falling rapidly.
The statement is the latest vote of confidence in China's cooling tactics, which include forcing banks to keep more money in reserve instead of lending, and halting new projects in red-hot industries like steel and aluminium.
Premier Wen Jiabao said on Tuesday he was confident of slowing the booming economy while engineering a soft economic landing.
"The economic situation is generally sound and macroeconomic measures taken by the central government have already showed obvious results and unstable and unhealthy elements in the economy have been contained," the commission said in a statement.
"Despite the results achieved, there are still some striking constrictions and problems in the economic operation. The investment growth rate is still relatively high and investment structure is not rational. The pressures on overall prices to increase are relatively big."
For instance, China's grain prices in February this year rose to near-record highs since 1996 after years of declining production, prompting the government to sell million tonnes of grain stocks. China's grain output in 2003 was the lowest in 13 years.
The development agency also warned of the strain on the country's energy infrastructure, due to the intense mismatch between supply and demand for coal, oil and power.
"It will be an enormous challenge to meet the peak demand for power this summer," it said.
Authorities have warned that rapid growth in credit and fixed asset investment is fuelling inflation and undermining the world's sixth-biggest economy, which grew an annual 9.8 percent in the first quarter.
Central bank officials have said recently that interest rates may have to rise if inflation passes five percent. China's consumer price index was up 4.4 percent in the year through May, the fastest pace in years.