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Aimed for better, faster economic growth: Coment
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17:23, July 24, 2007

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China decides to raise the interest rate and cut the withholding tax on interest income in a coordinated move to get the blistering economy on a healthier footing. The benchmark one-year deposit and lending rates of commercial banks would be raised by 0.27 percentage point, effective from last Saturday, or July 21, and this has been the third interest rate increase in a year, the central bank said.

Meanwhile, the State Council, or the central Chinese government, has reduced the withholding tax on interest income to 5 percent from 20 percent as of August 15.

Judging from the relevant statistics released on the performance of China''s national economy in the first half of the year, although the central banks'' two previous interest rate raises earlier this year have acquired their outcome to some extent, a trend for the overheated growth of national economy has not slowed down, and interest rate raises by the central bank and other monetary policies have not yet attained their anticipated effect.

On the day prior to the latest interest rate increase, the National Bureau of Statistics (NBS) publicized the statistics on China''s economic performance in the first half of the year, which has indicated a situation with the "better and faster growth" of economy.

By being fast, it is meant to demonstrate the fast growth rate of Chinese economy. The NBS said the nation''s grow domestic product (GDP) grew by a sizzling 11.5 percent in the fist six months, a new record set for the same period of the past 12 years since 1995. By being good, it is meant to embody a marked rise in consumption and in an average per-capita income for both urban and rural residents.

In the first six months of 2006, the total amount of retailed consumer goods rose by 15.4 percent year on year, and the increase range posed a new high since 1997. Meanwhile, the gap between the growth of consumption and increase of investment in fixed assts was further narrowing.

The income of China''s urban and rural residents had been on a sustained, rapid growth and, deducting from the price factors, the net income growth reached 14.2 percent, with its increase ranging exceeding 4 points over the same 2006 period, and the net cash increase for the per capita income of farmers rose 13.3 percent, or 1.4 percent higher than that in same period last year.

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