The Chinese government will stick to an economic policy that focuses on
curbing inflation for the rest of the year, a senior official yesterday told
China's top legislature, as slowing output and rising prices loom over the
post-Games economy.
Economic planners would exert themselves to increase supplies of necessities,
closely track key prices and make price controls more effective, National
Development and Reform Commission deputy chief Zhu Zhixin told the fourth
session of the Standing Committee of the 11th National People's Congress.
"A lot of factors can drive prices up," said Zhu. "There is a strong demand
for primary products, with prices hovering high on international markets, while
more expensive land and labor at home will add to costs."
His statements came after China's main inflation indicator showed a
deceleration in July and as the world wondered where the already slowing economy
would head after the glitz of the Games.
The consumer price index was up 6.3 percent last month over July last year,
lower than the 7.1 percent in June and 7.7 percent in May, as tighter monetary
policies adopted last year seemed to bite.
Meanwhile, the country's economic output in the first half was 10.4 percent
higher, compared with 10.6 percent in the first quarter and 12.2 percent in the
first half last year.
Zhu said the output slowdown was "a moderate correction from a high level".
"The national economy is heading in the direction expected by the
macro-control policy."
Zhu cited the pressures on some industries and enterprises as one of the
major conflicts in the economy, saying it would take time for the latest
supportive policies to show an effect and for companies to adjust.
He told the top legislature the government would continue to seek a balance
between fighting inflation and maintaining growth.
Tasks for the rest of the year included improving the contribution of
domestic consumption to economic growth, boosting agricultural output and
increasing aid to small enterprises, he said.
The government had been focusing on preventing the economy from overheating
before changing the goal to "keeping steady, rapid growth" in July.
Many analysts foresaw a loosening of the tight monetary policy to provide
liquidity for enterprises, especially exporters, that were squeezed by weakening
demand, credit controls and rising costs.
Earlier this month, administrators raised the export tax rebate rates for
some textiles and garments, while the central bank allowed more credit to small
and medium-sized enterprises.
"The fiscal and monetary policies are likely to be eased, if the current
trend is a guide," said CITIC Securities analyst Zhu Jianfang. "The central bank
is not expected to come up with any big tightening moves after the
Olympics."