"The slowdown falls within expectations of our macro-economic controls. And despite the slowdown, the growth rate is still high," the NBS spokesman Li Xiaochao told a press conference on Thursday.
To prevent the economy from becoming overheated was one of the two primary targets set by the Chinese government for 2008, Li said. The other was to guard against galloping inflation.
To this end, China had since late last year churned out a series of tight macro-economic control measures in an effort to cool down the economy and fight inflation.
Notably, for the first time in 10 years, China decided last December to shift its monetary policy "from prudent to tight" in 2008 to prevent overheating and a surge in inflation.
Economic analysts agreed with Li's viewpoints.
Zhuang Jian, a Beijing-based senior economist with the Asian Development Bank (ADB), told Xinhua right after NBS' figure release that China's macro-economic controls, particularly the tight monetary policy, contributed to the slowdown.
The world's economy was on a downward track, not only in the U.S. and Europe, but also in Asia, and such a slowdown had hit China's foreign trade, one of the country's three major growth locomotives, Zhuang said.
While Zhuang and other analysts also warned of the challenges facing the Chinese economy as the U.S. credit crisis was still far from over, a large number of China's exporters and other small- and medium-sized companies were undergoing hard times, and the soaring prices of energy and raw materials were set to stoke China's domestic inflation pressures.
"The CPI is still at a high level and more efforts from the Chinese government are needed," Zhuang said.
On the other hand, China needed to ensure an economic soft landing -- a slight slowdown in economic activity -- and prevent the economic growth from suffering a big drop, warned the ADB economist.
A recession after olympics? Maybe not
With a slowdown in place, many analysts are now focusing on where the Chinese economy is heading in the second half. The economy has pulled through the severe tests of two great natural disasters in the first half -- the winter blizzard this February and the 8.0-magnitude earthquake in May, but will it succumb to the so-called Post-Olympics Effect?
The Post-Olympics Effect refers to the phenomenon that some economies were hit by a post-Olympic economic downturn, or called "Valley Effect" or "V-low Effect".
The phenomenon was mainly caused by a dramatic investment increase at the pre-Olympic stage, accompanied by a boom in consumption and revenues. But the investment and consumption plunged following the Olympics while the host city would have to shoulder the heavy burden of maintaining idle sports venues.
According to the Bank of China (BOC), which conducted a study of 12 Olympic games spanning 60 years, most economies of the hosts suffered from the Post-Olympics Effect.
In nine of the 12 Olympics, including the 1988 Seoul and 1992 Barcelona Olympics, the hosts' annual GDP growth in the eight years following the Games was 0.4 to 2.5 percent lower than during the eight years prior to the event, the BOC study showed.
Then how about the post-Olympics Chinese economy?
According to Li Xiaochao, the spokesman, history showed that a post-Olympics downturn happened mainly in smaller economies, such as the Republic of Korea, while large economies such as the United States had not experienced such a downturn.
"The Olympic Games is lending strength to the Chinese economy. But the trend of development will be determined by the fundamentals of the Chinese economy itself," said Li.
"Based on figures of the first half, the overall Chinese economy is in good shape," said the spokesman. "Currently there are two major sources of pressure for China's economy, one is inflation and the other employment. We will try our best to find a balancing point between the two sources."
Andrew Michael Spence, the 2001 Nobel Prize winner for economics, had said that the post-Olympics effect would not have much fallout in the Chinese economy.
"I don't think that the falling-off will be very big in the Chinese economy case. There are two things to say. One is it's a big market now, so you can sustain growth on the domestic market. Secondly, from the point of the view of the rest of the world, China now is an important source for global growth, so everybody has a common interest or a shared interest in Chinese economic growth," he told CCTV.
Fan Gang, member of the Monetary Policy Committee under the People's Bank of China, the country's central bank, had expressed similar views on many occasions.
In mid-June at a forum on the Olympic economy, he said that the Chinese economy was set to grow healthily and steadily after the Games and a post-Olympic downturn was highly unlikely.
According to Fan, Beijing's investment to build sports venues and other infrastructure, though worth tens of billions of dollars, accounted for a mere three percent of the country's total investment in fixed assets.
"China is a big country. Beijing is small.... Even if Beijing’s investment in infrastructure drop sharply after the Games, it would not have a significant impact on the whole economy," said the noted economist.
Fan added that it was unlikely that Beijing would slash fixed assets investment since the city was still at the early stage of economic development and its appetite for infrastructure would still be huge after the Olympics.
"Over the past several years, Beijing has been forced to reduce some other infrastructure projects in order to concentrate on the construction of sports venues," he said.
At the national level, Fan said China had been taking serious macro-economic control measures to adjust its economy since the end of 2007 and the economy would probably not be subject to further adjustments after the Olympics.
"Our growth rate has dropped, exports decreased and the foreign trade surplus has declined. We cooled down the stock market and real estate market," Fan said. "Such adjustment and micro-economic control measures certainly reduce possibilities of a post-Olympic downturn."