Wed, Jul 11, 2012 - Page 14 News List

Stabilizing growth a top priority: Chinese premier

SLOWDOWN WORRIES:Among the measures taken to avert a hard landing, Beijing last week cut interest rates for the second time in a month to spur growth


Chinese Premier Wen Jiabao (溫家寶) said yesterday that stabilizing growth was a “top priority,” after fresh data raised more worries of a slowdown in the world’s second-largest economy.

“As a big developing country, a certain speed of economic growth must be maintained,” Wen said. “Stabilizing economic growth is not only a top priority, but also a long-term arduous task.”

His comments came shortly after the government reported that demand for imports fell more sharply than expected last month, leading to a widening of the trade surplus and stoking concerns about an economic slowdown.

A day earlier, China said inflation slowed last month to its lowest level in 29 months, giving the government more flexibility in its efforts to reboot the economy.

Wen said encouraging domestic consumption, diversifying exports and boosting government investment would provide drivers for growth.

“Currently, it is important to promote reasonable growth in investment,” he said in a statement.

His remarks came just three days before China is due to announce economic growth figures for the second quarter.

China’s economy grew an annual 8.1 percent in the first quarter of the year — its slowest pace in nearly three years.

Economists expect the economy to have grown 7.6 percent in the second quarter from a year earlier, according to a poll by Dow Jones Newswires.

Earlier this year, China set an annual economic growth target of 7.5 percent, down from 9.2 percent last year and 10.4 percent in 2010.

Among the measures already taken to avert a hard landing, the government last week cut interest rates for the second time in a month.

The government has also cut reserve requirements — the amount of money banks must hold in reserve — three times since December last year.

Top leaders have urged a move away from exports and the promotion of domestic consumption as the key engine of economic growth.

The nation’s trade surplus hit US$31.73 billion last month, up 42.9 percent from the same month last year, the General Administration of Customs said yesterday.

While exports for the month rose 11.3 percent year-on-year to US$180.21 billion, imports climbed just 6.3 percent to US$148.48 billion, government data showed.

“While exports increased at a low level, growth of imports was sharply slower than exports as domestic demand declined due to China’s slowing economy,” customs spokesman Zheng Yuesheng (鄭躍聲) told reporters.

Compared with May, exports last month edged down 0.5 percent, while imports were down 8.9 percent.

“The data overall suggest that domestic investment and global growth are slowing,” Alaistair Chan, an economist with Moody’s Analytics, said in a research report.

Slowing domestic growth would prompt China to further ease monetary policy, while at the same time boosting investment, analysts said.

Wen’s remarks came after he warned at the weekend that the country’s economy faced “downward pressure” and called for more aggressive moves to keep growth on track.

“China will definitely continue to introduce monetary easing policies,” Citic Bank International chief economist Liao Qun (廖群) said. “There may be one interest rate cut and two cuts in the banks’ reserve requirement ratio in the second half.”

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