China’s economy is safe from a “double-dip” slowdown in growth, a top economic planner said yesterday, though he acknowledged challenges in keeping inflation under control and cutting back on excessive and wasteful investments.
“First of all, you can say for sure that the Chinese economy will not double dip,” Li Pumin (李樸民), a spokesman for the National Development and Reform Commission, said in an online conference posted on the main government Web site.
Li pointed to the gradual world economic recovery and China’s own strong potential as factors supporting stable expansion after the 10.3 percent growth last year that displaced Japan as the world’s second largest economy.
China’s economy slowed only briefly during the global financial crisis, as massive government stimulus spending helped counter the impact of plunging exports. However, that same spending, along with surging food prices, is now seen as a factor behind inflation that hit a 28-month high in November and remains above the government’s target of 4 percent.
After growth, Beijing’s top priority is stable prices, Li said.
Apart from ensuring adequate and efficiently distributed food supplies, the government needs to “resolutely control high and excess capacity and redundant, wasteful construction and to improve the quality and efficiency of investments,” he said.
China’s share markets have surged in recent days following reports that inflation may have eased from the near-5 percent level it has hovered at in recent months, easing worries the government may further tighten credit or hike interest rates.
However, a central bank official, cited in the newspaper China Securities Journal yesterday, said the issue of whether to raise interest rates would depend on various factors, including prices, consumer demand and investment and the international situation.
China will handle the issue in a “forward-looking, scientific and effective manner,” the report cited Du Jinfu (杜金富), a vice governor of the People’s Bank of China, as saying.
Beijing has boosted the amount of capital banks are required hold as reserves eight times since early last year and hiked interest rates three times since October, seeking to pull money out of circulation and cool prices.