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How to interpret China's economy in first half of 2007? (4)
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17:26, July 23, 2007

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Control: preventing economy from overheating

China's national economy has not only developed rapidly but also received good returns. Agricultural production witnesses a bumper harvest, achieving a record high in the summer grain yield. Preliminary statistics show that the country's summer grain output reached 115.34 million tons, an increase of 1.46 million tons. It is the fourth consecutive year with a bumper harvest. Enterprise efficiency continued to improve. During the first five months, growth rate of profits of above-scale industries reached 42.1%, an increase of 16.6 percentage points over the same period last year. Meanwhile, both financial revenue and residents' income have been increased dramatically.

How far is China's economy from overheating then? This is a question of great concerns of all sides. Li Xiaochao emphasized at the news briefing that we should not only give a comprehensive analysis on economic indicators, but also should note that the economic growth benefited from the good environment both at home and abroad.

As a matter of fact, the world economic develops in a better way than it was expected at the beginning of this year. Although the US economic growth has slowed down comparing with the previous year, it is still better than expected. The growth rate for the whole year is expected to exceed 2.2%. Euro-zone economy has continued to maintain strong growth momentum, with an annual economic growth close to 2.3%. Japan's economy also grows faster than the previous year, with an annual economic growth of about 2.3%. Meanwhile, the Asia-Pacific area, Eastern Europe, Latin America and other emerging markets and developing countries have also maintained rapid economic growth.

From a domestic perspective, material basis and conditions that support economic development have been improved significantly. Li stressed, "We should observe the world with different points of view and should understand that the entire environment is changing, as well s the base of development. After nearly 30 years of reform and opening up, China has obtained a high degree of openness. We can not only access the international market now, but also can use international resources to meet our demand for the economic development."

Although the available data are not strong enough to demonstrate an overheating economy, we should do something to prevent it from becoming overheating. As a matter of fact, some systemic and structural problems are not solved in the first half of the year. The international payment is out of balance. Food prices growth rate is too high. Problems of energy saving and emission reduction are particularly prominent. To ensure a fast and sound development of the national economy, we must focus on these outstanding issues and continue to strengthen and improve macro regulation and control.

By People's Daily Online
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http://english.people.com.cn/90001/90780/6222161.pdf