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Economy Growth Back to 'Normal'

China's economy has returned to "normal growth levels," state-run China Central Television reported on Monday.

"Part of China's overheating risk has been released," it said in the 7:00 PM evening news broadcast. The speed of current economic growth is declining in a "relatively stable manner without big fluctuations," it said.

China's economy grew at the slowest pace since 2005 in the second quarter, prompting speculation that the government will slow yuan appreciation to protect exporters and related employment, Bloomberg News reported. Gross domestic product rose 10.1 percent from a year earlier, down from 10.6 percent in the first quarter, as exports weakened and the government curbed lending.

The annual trend of the "stable and relatively fast economic growth" won't change, Yao Jingyuan, chief economist at the National Bureau of Statistics told CCTV.

China's actual growth capacity is "close" to its potential growth capacity, CCTV reported without giving indications of future monetary or fiscal policy direction. The government needs to ensure growth and curb inflation at the same time, according to CCTV.

Inflation eased to 7.1 percent in June from 7.7 percent in May as food-price gains slowed. The pace of growth compares with the central bank's 4.8 percent target for the year.

The central bank is weighing the threat from inflation against the risk of an economic slump as global growth slows. Export growth cooled more than economists estimated last month, adding pressure on the government to ease gains in the yuan to protect manufacturers.

Policy makers will soon decide "whether the economy continues to cool or policy is changed to reinflate it," Stephen Green, the Shanghai-based head of China research for Standard Chartered Bank Plc, said in a July 10 report.

(Shanghai Daily July 22, 2008)


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