China should avoid sharp drops in economic growth caused by the double-whammy of tightening policies at home and slowed global economic development, according to Xu Xianchun, vice director of the National Bureau of Statistics.
"We should strike a balance between an overheated economy and an economy with sharp falls," said Xu in an article in the People's Daily yesterday. "The key of it is to prevent big drops in exports and to curb the excessive increase of consumer prices."
Influenced by the United States subprime mortgage crisis, China's export growth will weaken because of less demand in overseas markets including the US, Europe and Japan ?? China's big three trading partners.
Last year, growth in China's exports to the US had already fallen 10.5 percentage points compared with a year earlier, and Xu expects the pace to continue to slow this year.
He said the lowered export growth could help to cut the trade surplus and provide an opportunity for China to adjust its export structure.
For example, it may help to reduce the export of food and natural resources and stimulate domestic output of higher-end products.
But Xu cautioned that exports should present a gradual downturn to allow the economy to digest the negatives.
He also said China should work harder to tame inflation, which deteriorated due to the worst domestic snowstorm in five decades and higher prices of rice and fuel on the global market.
Xu said the tightening policies should take into consideration any potential harm to the economy. "China's macroeconomic control should achieve the goal of reining back inflation and helping the economy to slow down in a controlled manner," Xu said.
He expected growth of consumption to maintain or pick up this year, while investment and exports would slump from their fast growth last year.
Overall economic expansion would slow this year compared with that of last year, he said. In the first quarter, China's economy expanded 10.6 percent to 6.15 trillion yuan (US$878 million).
(Shanghai Daily April 22, 2008)