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Hard landing unlikely for China's economy

By Ye Xiaonan (People's Daily Overseas Edition)

15:39, September 30, 2011

Edited and Translated by People's Daily Online

Given the many uncertainties in China's economic development due to the uneven growth of the world economy, fragile recoveries in the United States and the European Union and the inflationary pressure faced by emerging economies, what kind of macroeconomic situation will China face? What direction will it take?

Lu Zhongyuan, vice director of the Development Research Center of the State Council, said at a news briefing hosted by the State Council Information Office on Sept. 28 that China's economic growth rate climbed beyond 9 percent in the first three quarters of 2011 and was within a reasonable range determined by the country's growth potential. China's economic growth rate in 2011 is expected to remain at higher than 9 percent. This will play a role in promoting the recovery of the world economy and avoiding a double-dip recession.

Signs of a slowdown in economic growth appear

China's economic growth rate has gradually dropped to the range of 9.5 to 9.8 percent since the second half of 2010, with an economic growth rate of 9.7 percent in the first half of 2011 and 9.5 percent in the second quarter. Some leading indicators have shown the signs of slowdown in economic growth.

It should be noted that the economic growth in some provinces of eastern China has already slowed over recent years, while investment and economic growth in central and western regions have accelerated. Given that the developed eastern region accounts for the majority of China’s total GDP and the higher industrialization and urbanization levels, the slowdown in their economic growth indicates that China's overall economic growth rate will surely slow down.

"Research shows that despite a short-term correction, China’s economic growth is still within the normal range, and the economic growth rate for 2011 will remain above 9 percent," Lu said.

The international community has recently had many discussions about whether China's economy will have a "hard landing." Lu said that it is unnecessary to be worry about this possibility.

Lu speculates that according to the calculations based on China’s economic growth trends and fluctuation range over the past three decades since reform and opening-up, China’s economic growth rate should stay around a trend line of between 9 percent and 10 percent, with a reasonable fluctuation range of 8 percent to 12 percent.

Thus, China's economic growth rate is still within a reasonable range after the correction and is slightly fluctuating around the trend line. Therefore, it is unnecessary to be worried about the "hard landing." The objective of macroeconomic regulation is to avoid drastic fluctuations in economic growth and keep it within the upper and lower limits of the reasonable range.

Lu pointed out that China's economic growth has slowed down to some extent, which is a result of China's active macroeconomic readjustment and accords with China's strategy of macroeconomic readjustment and control.

"We want China's economic growth to slow down a little because that will help control inflation, promote the adjustment of the economic structure and reduce energy consumption and carbon emissions," Lu said.


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China is the only one predicting that China will not have a "hard landing."
  

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