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Growth dips in Q2 鈥 but so does inflation
By Wang Yanlin |
July 15, 2010, Thursday
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Online Edition
Online Edition
China's economy moderated faster than expected in the second quarter while the inflation rate also slowed down, contrary to many estimates, due to increased food supply last month.
A senior government official said China's economic growth has maneuvered deftly from the risk of overheating, while economists said moderation in consumer prices may be temporary and the country still has to be alert for inflation.
Gross domestic product in China increased 10.3 percent year on year in the second quarter, slower than the surge of 11.9 percent in the first three months, the National Bureau of Statistics said today.
Economic output in the first half thus rose 11.1 percent from a year earlier to 17.28 trillion yuan (US$2.54 trillion).
"Generally speaking, China's economic growth is running stably on a fast track," said Sheng Laiyun, a spokesman at the bureau. "Thanks to scientific and effective policies and measures, China managed such a growth rate which laid a solid foundation for China to reach its yearly target."
China aims to grow at 8 percent for the whole year, a goal set by the central government in January.
However, some economists said the policymakers should still be cautious about inflation, although its advancing pace moderated last month.
Consumer Price Index, the main gauge of inflation, gained 2.9 percent on an annual basis in June, down from the jump of 3.1 percent in May.
Food prices, which constitute one-third in the basket, swelled 5.7 percent from a year earlier last month while the non-food sector increased 1.6 percent.
"More supply of food, including rice and vegetables after a good harvest in the spring, has contributed to ease food-led inflationary pressure," Sheng said. "The central government has also tried to mop up money supply on the open market to control inflation."
But Wang Qing, an economist at Morgan Stanley, still called the moderation "a surprise."
"We don't think the decline in vegetable prices would be sustainable," Wang said. "We reaffirm our call for the headline year-on-year CPI inflation to peak in July and start to edge down over the rest of the year."
A senior government official said China's economic growth has maneuvered deftly from the risk of overheating, while economists said moderation in consumer prices may be temporary and the country still has to be alert for inflation.
Gross domestic product in China increased 10.3 percent year on year in the second quarter, slower than the surge of 11.9 percent in the first three months, the National Bureau of Statistics said today.
Economic output in the first half thus rose 11.1 percent from a year earlier to 17.28 trillion yuan (US$2.54 trillion).
"Generally speaking, China's economic growth is running stably on a fast track," said Sheng Laiyun, a spokesman at the bureau. "Thanks to scientific and effective policies and measures, China managed such a growth rate which laid a solid foundation for China to reach its yearly target."
China aims to grow at 8 percent for the whole year, a goal set by the central government in January.
However, some economists said the policymakers should still be cautious about inflation, although its advancing pace moderated last month.
Consumer Price Index, the main gauge of inflation, gained 2.9 percent on an annual basis in June, down from the jump of 3.1 percent in May.
Food prices, which constitute one-third in the basket, swelled 5.7 percent from a year earlier last month while the non-food sector increased 1.6 percent.
"More supply of food, including rice and vegetables after a good harvest in the spring, has contributed to ease food-led inflationary pressure," Sheng said. "The central government has also tried to mop up money supply on the open market to control inflation."
But Wang Qing, an economist at Morgan Stanley, still called the moderation "a surprise."
"We don't think the decline in vegetable prices would be sustainable," Wang said. "We reaffirm our call for the headline year-on-year CPI inflation to peak in July and start to edge down over the rest of the year."
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