Singapore: The Chinese economy expanded by 11.5% in the first six months of the year following an unexpected resurgence of economic activity from early 2007.

The Chinese government has so far met with little success in reining in growth, which picked up further between the first and second quarters of the year.

According to a report published today by Standard & Poor''s Ratings Services, China''s Economy Refuels In Mid-Air, more cooling measures can now be expected.

"The strong economic impetus of the first half of 2007 means that real GDP growth for the year is now projected to come in at 11.3 per cent," Standard & Poor''s credit analyst Kim Eng Tan said.

"However, we expect the authorities to be cautious in applying the brakes. This suggests that the growth momentum could remain in the double-digit range for yet another year, with growth forecast at 10.2 per cent in 2008."

The exceptional economic growth momentum in the first six months of 2007 appears to have convinced policy makers that overheating is no longer confined to specific sectors.

Thus while more administrative measures are certainly on the cards, the administration has also expressed a greater willingness to use monetary policy as a means to cool the economy.

"Following three hikes in the first seven months of 2007, we expect further increases in official interest rates to follow," Kim Eng Tan said.

But the Chinese government is not expected to slam down hard on the brakes. Over the next year or so, the leadership of both the Communist Party and the government will undergo important changes.

During this period, officials will be even more wary of triggering unrest among the population through a sharp slowdown in the economy. "It is likely that the monetary authorities'' cautious handling of the economy will therefore maintain buoyant economic growth in 2008," Kim Eng Tan added.