China’s economy set to cool, official index indicates

July 1st, 2008 - 10:45 pm ICT by IANS  

Beijing, July 1 (Xinhua) China’s economy had been slowed to expand at a more desirable and moderate rate for the five months till May, the national statistics agency said Tuesday citing an official macro economy index chart. The chart, filed by the National Bureau of Statistics (NBS), showed the latest figure for May was 113.3, the same as for the previous four months, making a row of “green lights”.

This compares to a high of around 120 from September to December last year when the macro economy lit up “yellow lights” to signal overheating risks. The ideal figure set by the bureau is 100.

The four months of “yellow lights” prompted the government to adjust macro controls with tighter monetary policies to avoid an overheating economy at the end of last year.

“The country’s macro control measures played a significant role in reversing the overheating trend,” said Zhang Liqun, a macro-economist at the Development Research Centre of the State Council, the main administrative authority of China.

The chart also revealed the country’s consumer price index, a key indicator of inflation, had signaled “yellow lights” for nine months since September, indicating lingering inflationary pressure.

The May index forecasting economic growth, according to the chart, fell 0.15 points from April to 102.35, showing the economy may further cool.

Deputy head of the NBS Xie Hongguang said Tuesday that China’s economy might continue to decelerate as a result of slower industrial output growth and weakening overseas demand, and domestic inflation remained a big problem.

However, the national economy remained robust, though its growth slowed to 10.6 percent in the first quarter, down 1.1 percentage points from a year earlier, Xie said.

Zhang was also optimistic about China’s economy, saying, “The economy, though cooling, maintained a rapid growth, and the country’s outlook on investment, consumption and exports remained positive.”

Economists believe a 9 to 10 percent growth rate was most desirable for China’s economy, and the growth would slip from last year’s 11.9 percent to stand at around 10 percent this year.

Fan Jianping, chief economist of the State Information Centre, put China’s economic growth at 10.3 percent for 2008, the China Securities Journal reported Tuesday.

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