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China's economy set to face bumps from various tests
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The Yangtze Delta and Pearl Delta regions have shown signs of an economic slowdown and some economists said China's economy may face a bumpy road because of various challenges.

They made their comments before China is set to release economic data for the first half of the year on Thursday.

Hu Chunli, a researcher with the State Information Center, said the advantages of low labor and raw material costs were disappearing in China's coastal cities and this erosion made it harder for businesses there to grow.

Export-oriented firms in these cities suffered more from the appreciation of the yuan.

According to the latest data released by the National Development and Reform Commission, China's eastern areas grew 15.71 percent from January to May, the lowest compared to the western, northeastern and the middle regions of China's mainland.

The growth of the eastern areas also posted the sharpest slowdown of all the regions, with the pace moderating 3.1 percentage points from a year earlier.

Meanwhile, Hu said tight credit control prevented small and medium-sized companies from getting finance for further development.

Yu Bin, director of the macroeconomic research department of the Development Research Center under the State Council, said the United States credit crisis, natural disasters, the unstable performance of China's securities and real estate markets as well as the surging costs of production, made it possible that the nation's economy may experience a sharp slowdown this year.

"Considering the combination of all these factors, China's economy may face a sharp slowdown. It may feel like a sudden braking and the engine may not be easy to restart," the National Business Daily said yesterday, quoting Yu speaking at a forum in Beijing.

China's economic growth will likely moderate to 9.8 percent in 2008 from last year's 11.9 percent, the World Bank predicted in its latest China Quarterly Update last month.

But the World Bank was generally positive about China's economy as real growth of exports and imports remained robust despite economic activity in the country moderating in line with the global economy's slowdown.

In the first half of the year, China's trade surplus reached 99 billion U.S. dollars, a decline of 11.8 percent from a year ago as export growth slowed while imports expanded faster.

(Shanghai Daily July 15, 2008)

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