To slow economic growth and curb investment, the People's Bank of China, or central bank, raised key interest rates in April and increased the amount banks are required to hold in reserve.

China Business News cited Jia Yinsong, an official with the National Development and Reform Commission, as raising four key problems: an excessively fast pace of growth in investment; excess liquidity, or too-fast growth in money supply; unbalanced foreign trade and severe hikes in prices for raw materials.

China Securities Journal reported that China's M2, the country's broadest gauge of money supply, rose 18.4 percent in June from the same month a year earlier, down from a 19.1 percent increase in May.

New local currency loans totaled 360 billion yuan (US$45 billion) in June bringing the total for the first half of the year to 2.14 trillion yuan (US$267.5 billion), the report said.

The lending figure for June was 102.7 billion yuan (US$12.8 billion) less than in June 2005.

"It is far too early to declare victory in the fight to control liquidity, and we still think more reserve requirement hikes will be necessary," Stephen Green, senior economist with Standard Chartered Bank in Shanghai said in a research note issued Monday.

But he added "these numbers suggest that the PBOC is fighting back effectively."