China should stick with its tight monetary policy unless the economy's expansion slows to below 9 percent, a National Bureau of Statistics official said.
"Below 9 percent, it means the tightening is overdone and needs to be loosened," Zheng Jingping, the bureau's chief engineer, said at a seminar in Beijing yesterday. The nation's GDP expanded by 10.6 percent in the first quarter.
Premier Wen Jiabao is balancing the risk of a slump in the world's fastest-growing major economy against the threat from inflation that is close to an 11-year high. A 1-percentage point slowdown in the United States economy will take 5 percentage points off China's export growth, the Chinese Academy of Social Sciences said yesterday.
"A reasonable combination for this year is 4.8 percent inflation and 9.7 percent GDP growth," said Zheng. Inflation may be between 4.5 percent and 5.5 percent, he added. The government aims to cap price gains at 4.8 percent, Bloomberg News said.
China can't afford a sharp slowdown because it needs to create jobs, cut poverty and continue with urbanization, he added.
Consumer prices surged by 8.3 percent in March on food and fuel costs. Exports grew 21 percent in the first quarter and the trade surplus narrowed by 10 percent to US$41.4 billion.
"As long as inflation can be kept below 6 percent, there's no need for further tightening measures and economic growth should be able to stay strong," said Fan Jianping, the State Information Center's economic forecast chief, at the same seminar.
Interest rates are at a nine-year high. The amount of money that banks must set aside as reserves will rise to a record 16 percent today. Money supply growth slowed last month.
CASS said inflation will rise to 5.5 percent this year. The central bank's outlook is "more pessimistic" according to Wang Yi, an official with its research and statistics department.
(Shanghai Daily April 25, 2008)
