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China faces a bumpy road to achieve stable growth

(Xinhua)

08:32, July 19, 2012

Chinese policymakers try to direct China's economy through global and domestic difficulties.(Photo/China Daily)

BEIJING, July 18 (Xinhua) -- For safety reasons, drivers slow down when travelling on bumpy roads. Chinese policymakers appear to be using the same reasoning in directing the world's second-largest economy through global and domestic difficulties.

China's GDP expanded 7.6 percent in the second quarter from a year ago, down sharply from 9.5 percent a year earlier and half a point below the 8.1 percent rise for the first three months of this year.

Although the pace is still enviable for economies elsewhere, it marks an uncomfortable ebbing for China. It was the lowest rate since the 2008-2009 global recession, when China's growth eased to 6.6 percent in the first quarter 2009 before a massive government stimulus package provided double-digit growth.

The slowdown is partly because of the global economic woes. The eurozone, China's largest trade partner, is in recession, while the recovery in the United States is moving in fits and starts.

The International Monetary Fund (IMF) on Monday cut the projected world economic growth rates of this year and the next, as downside risks to the global growth loomed large.

The IMF also trimmed the growth forecasts for emerging economies, including China, against the backdrop of the simmering eurozone debt crisis.

Foreign trade, once a major bedrock of China's expansion, remains weak. Minister of Commerce Chen Deming said last month the country would reach its 10 percent growth target for foreign trade this year "if lucky."

To some extent, China'a slowing growth is also a self-induced outcome. The government expected a slight slowdown as it tried to tame the runaway real estate prices and high inflation.

The government's policies have largely worked with real estate regulation curbing the rising momentum of home prices and June's inflation rate eased to 29-month low.

However, these efforts have coincided with the global downturn and domestic economic rebalancing, sparking concerns that the slowdown might be deeper than initially expected.

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