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Snowstorms, global slowdown hurt Chinese companies
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Winter snowstorms across much of southern and central China have combined with a global economic slowdown to dent the development of mainland companies, the National Bureau of Statistics said today.

The prosperity index, a study of factors that drive and restrain the development of domestic companies, dropped 7.4 points from a quarter ago, the bureau said.

The first quarter index stood at 136.2, which is still considered high, the bureau added.

Despite worries that an uncertain global outlook may slow China's exports, economic growth is set to stay robust and authorities are well positioned to stimulate demand if needed, according to a World Bank report released on April 1.

The bank forecast China's growth at 9.4 percent for 2008 and 9.2 percent for 2009, two percentage points slower than in 2007, but still rapid by international standards, according to its six-month economic review of East Asia and the Pacific region.

The central government said during the National People's Congress session last month that it will stick to a tight monetary policy and target the economic growth of eight percent.

Export growth in China started to slow in the second half of 2007 as demand from other countries, especially the United States, eased. The trade surplus dropped sharply to US$8.56 billion in February from January's US$19.49 billion.

The World Bank said China's policy makers have raised interest rates and frozen prices of some products to prevent any acceleration in inflation.

Last month, China's Consumer Price Index, a main gauge of inflation, surged to a near 12-year high of 8.7 percent from a year earlier. The bank said higher food prices, triggered by shortfalls in pork supplies due to a disease outbreak and increases in food prices globally were behind the rise in inflation.

The bank said these price and cost developments take place against a large balance of payments surplus that has boosted liquidity. Such liquidity could lead to demand driven inflation.

(Shanghai Daily April 7, 2008)

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