"The tendency of the economy to grow a bit too fast is being brought under control," Li Xiaochao, spokesperson of the National Bureau of Statistics (NBS), was quoted as saying on October 19 at the release of China's major economic indices for the first three quarters. He indicated that macroeconomic growth has seen a slowdown since the government has taken measures to curb runaway development.

Li said the stable economic growth will contribute to the realization of the 11th "Five-Year Plan" by 2010. "Only if we continue to strengthen macroeconomic control, optimize the industrial structure and upgrade the growth mode will the national economy stay on the right track and keep up," he said.

Mild "drop"

The spokesperson attributed the slowdown in GDP growth to a range of measures taken since the beginning of the year, saying that the overheated economic development has initially been brought under control, and major indices have been stabilized at a slowing growth rate.

First, China's GDP expanded at a slightly slower pace in the third quarter. Incomplete statistics show that in the third quarter China's GDP grew by 10.4 percent, down
0.9 percentage points from 11.3 percent in the second quarter and generally similar to the 10.3 percent level in the first quarter.

Second, the industrial sector reported growth in added value for enterprises above designated size at 16.2 percent, 1.9 percentage points lower than in the second quarter. Specifically, the growth rate for July, August and September stood at 16.7 percent, 15.7 percent and 16.1 percent, respectively, lower than the 19.5 percent of June and the
17.7 percent of the first half. Among the 39 industrial sectors, 28 have seen a slow growth in the third quarter.

Third, fixed asset investment in urban areas soared at a rate of 24.2 percent, but 7.7 percentage points lower than in the second quarter. Of the total, fixed asset investment in urban areas rose 27.4 percent, 21.5 percent and 23.6 percent, respectively, in July, August and September.

Fourth, the rapid growth of currency supply has been stabilized. By the end of September, M2 rose 16.8 percent, down 1.6 percentage points from the growth rate in late June. Loans under RMB account have been brought under control. By the end of September, the account balance had risen 15.2 percent, 0.9 percentage points lower than the growth rate in August and 1.1 percentage points below the gain in July.

Li said the macro-control policy seems to be effective not only in avoiding an overheated economy but also in preventing big fluctuations in the economy.

Multiple choices

Li attributed the initial success of the policy to the various measures the Central Government implemented, ranging from currency control to the use of other financial tools, expanding from simple economic adjustments to the adoption of legal and administrative methods.

Also, the central bank raised the benchmark loan rate for financial institutions in April and twice increased the required reserve ratio on deposits, then raised loan and deposit rates, respectively.  In just half a year, the central bank adjusted its monetary policy four times, raising the required reserve ratio on deposits 0.5 percentage points, and increasing both the loan and deposit rates by 0.27 percentage points.

Other sources reported that at the working conference of the State Council, some officials also noted that while some major economic problems have been eased, the problem of over-investment in fixed assets and overdue credits still exists.

(China.org.cn)