China is capable of sustaining an economic growth rate of up to 10 percent a year without overheating, Horst Kohler, managing director of the International Monetary Fund (IMF), said Tuesday.

Kohler said he was happy to see China's economy had offset the negative impact of severe acute respiratory syndrome (SARS) and maintained a strong economic growth momentum.

He predicted that China's economy could achieve an eight to ten percent growth rate in a quite long period of time.

"I don't think, generally, that China's economy is overheated, and a growth rate of eight to ten percent is possible and can be sustained over many years," Kohler said.

Kohler regarded the government's plans for economic reform as "well thought through".

He believed the establishment of the China Banking Regulatory Commission and creation of the State Assets Supervision and Administration Commission would play a positive role in economic reform, especially in the sectors of state-owned enterprises and public finance.

Kohler said Chinese leaders had demonstrated determination to take further measures to decrease unemployment, accelerate the processing of the non-performing loans, and raise the income of Chinese farmers.

"I have confidence that China would make its way forward," Kohler said.

However, the IMF chief warned that over-investment in China's housing property sector and the rapid growth of bank credit in the macro-financial operation warranted serious attention.

(Xinhua News Agency September 3, 2003)