Economy
Wen: economy heading in right direction, 'relatively fast' growth seen
(Agencies)
Updated: 2010-06-30 14:26
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China's government said the world's third-biggest economy is heading in the right direction and business people and economists expect "relatively fast" growth to continue.
Premier Wen Jiabao said the nation will "further cement and develop the positive economic trend," in a statement posted on the government's website today. He pledged both continuity and flexibility in policies amid an "extremely complicated" domestic and global outlook.
Shares extended a global rout today after an unexpected drop in US consumer confidence fueled concern that the recovery in the world economy is faltering. In China, government efforts to cool the property market and the threat to exports posed by Europe's sovereign debt crisis have contributed to a 27 percent slump in the Shanghai Composite Index. [China stocks continue downward trend Wednesday]
"Today's statement may help reassure some investors who are worried about China's slowdown," said Lu Zhengwei, a Shanghai-based economist at Industrial Bank Co. "Still, policy makers may be reluctant to quickly withdraw stimulus policies given the uncertainties from the European debt crisis and recent policies that aim to cool property and some industrial sectors."
The statement was issued after two days of meetings Wen held with business people and economists, the government said. The structure of the economy is improving, with market-driven consumption, investment and exports together driving growth, the experts were cited as saying.
'Relatively fast'
Attendees said the economy is maintaining a "positive upturn" and full-year growth would be "relatively fast," according to the report. The economy is heading in the "expected direction" set by officials' macro-economic controls, Wen said.
China's economy expanded 11.9 percent in the first quarter from a year earlier. UBS AG forecasts a gradual deceleration to 8.5 percent in the fourth quarter as investment in infrastructure and property slows.
China's logistics federation and statistics bureau may report tomorrow that the nation's official manufacturing index weakened for the second month in June, according to the median estimate of 12 economists surveyed by Bloomberg. Chinese stocks fell to the lowest in 14 months today, with the Shanghai benchmark sliding 28.68, or 1.2 percent, to close at 2,398.37, the lowest since April 9, 2009. The CSI 300 Index fell 1.1 percent to 2,563.07.
Wen said the government will balance the goals of sustaining growth, restructuring the economy and managing inflation expectations.
Laying a 'foundation'
China needs to "look at the present and plan for the future and lay the foundation for steady and relatively fast growth next year and over a longer period of time," Wen said. The nation should "take the current opportunity" to more quickly adjust its growth model, he added.
The central bank indicated on June 19 that it is ending the yuan's peg to the dollar [China to further reform RMB exchange rate regime]and the finance ministry announced this month that it will scrap export rebates on some steel and metal products to help the government meet targets for cutting energy use and pollution in industrial production. [China scraps export tax rebates on some steel, metal products]