China's Wen says economic cooling to continue

(Adds details)

HONG KONG, Nov 7 (Reuters) - China will continue with steps to cool its economy, Prime Minister Wen Jiabao said in remarks reported on Wednesday in which he defended a policy of macro-economic controls against criticism it has been toothless.

Wen said one of his priorities was maintaining a stable rate of economic growth, along with healthcare, education and mass housing, the South China Post reported on Wednesday. "The current administration will endeavour to carry out its duties and the new cabinet will continue to maintain the continuity of the economic policies," Wen told reporters during a visit to Russia. The Chinese government has raised interest rates, clamped down on bank lending to companies in construction and cement industries, and introduced several steps to deter property speculation in an effort to prevent the economy from overheating.

China's annual gross domestic product (GDP) growth slowed a touch to 11.5 percent in the third quarter but not by enough to dispel expectations of more cooling measures.

But Wen said the curbs were working.

"Everybody agrees that China's economy has been doing pretty well for the past five years and it's actually one bright spot" in the global economy, he said.

"If that's the case, then to label macro-economic controls as toothless contradicts both fact and logic."

Some analysts say Beijing has not been tough enough in pushing through its economic cooling measures, with provincial governments loathe to temper rapid economic growth, which is often worn by officials as a badge of honour.

But rosy GDP figures mask underlying imbalances, notably a record trade surplus that is inundating the economy with cash.

Investment in fixed assets is soaring, although inflation showed signs of slowing in September, falling to 6.2 percent from a decade high of 6.5 percent in August.

With GDP growth hitting 11.5 percent for the first three quarters of this year, China for the first time is contributing more than the United States to world economic growth, according to the International Monetary Fund.