Measures of macroeconomic management are likely to make the Chinese economy slow down in the second half of 2006 but it will still grow steadily and rapidly from an overall point of view, according to "China Monetary Policy Report" of 2006 second quarter issued recently by the People's Bank of China, China's central bank. The report says that China's inflationary pressure will increase in the future because upside risk is greater than downside risk although there are some uncertain factors in the Chinese price trend.

It is said that China's central bank will use various monetary policy tools to rationally control the increase of credit and prevent Chinese economy from becoming overheated. In the mean time, it will take medium-term and long-term comprehensive measures to promote implementation of all the policies for boosting domestic demands, to enhance adjustment of economic structure and to push balance of international payments to basic balance.

The report points out that the issue of balance of international payments cannot be solved just by raising currency, but should be settled by exchange rate changes combined with domestic-demand-centered policies, such as boosting domestic demands, reducing rate of saving, adjusting preferential policies for foreign investment, increasing imports and enhancing the opening-up of markets.

By People's Daily Online