Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200807/20080717/article_367155.htm
Economic growth slows, inflation eases
Created: 2008-7-17 15:37:02
Author:Wang Yanlin
CHINA'S economic growth slowed in the first half of this year while the inflation rate also eased, both moving in line with expectations, the National Bureau of Statistics said today.
The major challenge in the future remains fast expanding consumer prices and macroeconomic policies will continue to be stable and consecutive, said Li Xiaochao, the bureau's spokesman.
The country's gross domestic product grew 10.4 percent in the first half to 13.06 trillion yuan (US$1.92 trillion), down 1.8 percentage points from the same period last year. It slowed from 10.6 percent in the first quarter this year and 2007's 11.9 percent.
The Consumer Price Index, the main gauge of inflation, settled at 7.9 percent in the first half. In June, it eased to 7.1 percent from 7.7 percent in May.
"China's economy is moving away from the risks of overheating and the growth rate has fallen within an expected range thanks to effective macroeconomic policies," said Li during a live press conference in Beijing.
"The growth of consumer prices has shown a slowing trend although the inflation rate is still at a relatively high level. The macroeconomic policies will keep stable," he said.
He stressed the first-half economic outcome was hard-earned because China had to weather challenges of surging commodity prices on the global market, natural disasters and big fluctuations in global stocks, foreign exchange and futures markets.
The Beijing Olympics will play a positive role in the economy, but its influence won't be very large given the nation's huge economic aggregate, said Li.
He took South Korea and the United States as examples. In 1988 when South Korea hosted the Summer Olympics, its economy achieved double-digit growth while the United States recorded a moderate 3.7-percent economic expansion when it held the 1996 Summer Games.
"On the whole, the Olympics effect is more visible in smaller scale economies. For China's economy, the Olympic influence won't be very large and the basic trend of growth is still decided by China's economic fundamentals," said Li.
Huang Yiping, an economist with Citigroup, said today the moderation of both real GDP growth and inflation was expected and elevated consumer prices confirmed that the tightening policies were likely to continue.
"As growth is still above 10 percent, it is too early to call for a relaxation of the policy controls," said Huang. "The tightening of monetary policies should continue in order to control the inflation risk. But the pace of tightening, such as adjustments in reserve requirements and the appreciation of the currency, could slow."
The central bank has increased the reserve requirement ratio to a 23-year high of 17.5 percent in June -- the fifth time this year that the ratio has been raised. But it has not adjusted the interest rate so far this year.
Meanwhile, the yuan has risen nearly 7 percent in the first half against the US dollar, the fastest pace since China ended a link to the currency in 2005.
Li Maoyu, an analyst with Changjiang Securities Co, said China won't change the basic tone of a tight monetary policy, but may make it more flexible and adjust the fiscal policy to rescue the troubled exporters in coastal areas.
The major challenge in the future remains fast expanding consumer prices and macroeconomic policies will continue to be stable and consecutive, said Li Xiaochao, the bureau's spokesman.
The country's gross domestic product grew 10.4 percent in the first half to 13.06 trillion yuan (US$1.92 trillion), down 1.8 percentage points from the same period last year. It slowed from 10.6 percent in the first quarter this year and 2007's 11.9 percent.
The Consumer Price Index, the main gauge of inflation, settled at 7.9 percent in the first half. In June, it eased to 7.1 percent from 7.7 percent in May.
"China's economy is moving away from the risks of overheating and the growth rate has fallen within an expected range thanks to effective macroeconomic policies," said Li during a live press conference in Beijing.
"The growth of consumer prices has shown a slowing trend although the inflation rate is still at a relatively high level. The macroeconomic policies will keep stable," he said.
He stressed the first-half economic outcome was hard-earned because China had to weather challenges of surging commodity prices on the global market, natural disasters and big fluctuations in global stocks, foreign exchange and futures markets.
The Beijing Olympics will play a positive role in the economy, but its influence won't be very large given the nation's huge economic aggregate, said Li.
He took South Korea and the United States as examples. In 1988 when South Korea hosted the Summer Olympics, its economy achieved double-digit growth while the United States recorded a moderate 3.7-percent economic expansion when it held the 1996 Summer Games.
"On the whole, the Olympics effect is more visible in smaller scale economies. For China's economy, the Olympic influence won't be very large and the basic trend of growth is still decided by China's economic fundamentals," said Li.
Huang Yiping, an economist with Citigroup, said today the moderation of both real GDP growth and inflation was expected and elevated consumer prices confirmed that the tightening policies were likely to continue.
"As growth is still above 10 percent, it is too early to call for a relaxation of the policy controls," said Huang. "The tightening of monetary policies should continue in order to control the inflation risk. But the pace of tightening, such as adjustments in reserve requirements and the appreciation of the currency, could slow."
The central bank has increased the reserve requirement ratio to a 23-year high of 17.5 percent in June -- the fifth time this year that the ratio has been raised. But it has not adjusted the interest rate so far this year.
Meanwhile, the yuan has risen nearly 7 percent in the first half against the US dollar, the fastest pace since China ended a link to the currency in 2005.
Li Maoyu, an analyst with Changjiang Securities Co, said China won't change the basic tone of a tight monetary policy, but may make it more flexible and adjust the fiscal policy to rescue the troubled exporters in coastal areas.
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