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Economic policy needs 'rethink'
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The country needs to rethink its economic policy with snowstorms hitting regions and an economic slowdown in the United States, economists have said.

"The economic situation has become complicated with the new factors cropping up," Wu Jinglian, one of China's top economists, told China Daily yesterday.

It is imperative that the new developments are considered with measures to combat high inflation and the overheating of the economy, said Wu, from the State Council Development Research Centre, the central government's think tank.

The reconstruction of southern China's infrastructure destroyed by the inclement weather will spur another round of investments, economists said, despite the fact that the government has vowed to curb excessive spending this year.

A US economic recession is also likely to drag down China's export growth by a large margin, they said.

The economists said the authorities need to carefully consider the economic situation before March 5, when the annual session of the National People's Congress opens and readjusted economic policies are expected to be announced.

Most of the economists also warn that the government should still be alert to risks of inflation, which will be boosted by high prices of imported resources and other rising costs such as labor.

"We have a high dependence on exports for some resources and their prices are expected to keep going up," said Tang Min, deputy secretary general of the China Development Research Foundation.

"Coupled with rising labor costs, import factors will put us at risk of high inflation."

Figures from the National Bureau of Statistics showed that China's inflation rate rose 4.8 percent for the whole of last year, but it has risen more than 6 percent monthly from June.

The authorities have listed keeping inflation down and slowing down the speed of investments as major economic tasks this year.

"But our investment spree cycle will be over soon and we need new ways to keep our growth rate high," said Wang Jian, head of the China Society of Marco-economics.

(China Daily February 4, 2008)

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