China's central bank warns that inflation is likely to increase before it goes down, while Australia's housing market continues to cool.

Economists say China's tightening of credit is succeeding in slowing down the economy.

The country's rate of industrial growth slowed in the 12 months through July for the fifth month in a row.

Production increased by more than 15 percent in the period, slightly less than the 16 percent in the year to June - and well below the peak growth rate of 23 percent in the 12 months to February.

Chinese officials have implemented a series of steps, such as the tightening of credit, to cool off the galloping economy. Among other measures, they are requiring banks to hold more cash in reserve.

Charlie Lay, an economist at Forecast Limited in Singapore, says China's measures seem to be cooling down the economy on all levels. "On the macro level you have the industrial production, money supply, investment indicators all coming off from the peak since the beginning of the year. Even on the micro-industrial level I think we're beginning to see a bit of credit squeeze as well," he said.

But China's central bank says it is too soon to declare victory. It says inflation, which rose 3.6 percent in the first half, is set to rise even further in the third quarter before easing off in the final three months of the year.

In Australia, the value of new home loans approved in June dropped about three percent from the previous month.

Economists expected a drop of just about two percent.

Analysts say this is a sign the Australian housing market is continuing to cool, and interest rates will remain unchanged at about five percent for several more months.

Interest rates in Australia were last raised in December as the nation's central bank sought to damp the overheated housing market.

Shipments from Taiwan of large-size flat panels used in televisions and computer monitors hit a record high of more than 14 million units in the three months to June. Shipments in June alone were 71 percent higher than June of the previous year.

Analysts said the increases were the result of heavy capacity expansion by producers and heavy demand from retailers.