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POLITICAL ECONOMY
China to focus on reviving economic growth: PM
by Staff Writers
Beijing (AFP) July 10, 2012

China's Wen says stabilising growth top priority
Beijing (AFP) July 10, 2012 - Chinese Premier Wen Jiabao said Tuesday that stabilising the country's economic growth was a "top priority", and authorities would encourage more investment.

"Stabilising economic growth is not only a top priority, but also a long-term arduous task," Wen said, following the release of data showing a slowdown in the expansion of the world's second-largest economy.

Wen said encouraging domestic consumption, diversifying exports and boosting government investment would provide engines for growth.

"Currently, it is important to promote reasonable growth in investment," he said in a statement.

The remarks came just three days before China announces economic growth figures for the second quarter, which are widely expected to confirm a further slowdown of the economy.

Trade data released on Tuesday pointed to the slowdown, with imports falling in June compared with May.

The government also said on Monday that the inflation rate had fallen to 2.2 percent in June, its lowest level for two-and-a-half years.

China's economy grew an annual 8.1 percent in the first quarter of 2012 -- its slowest pace in nearly three years.

Economists expect the country's gross domestic product rose 7.6 percent in the second quarter from a year earlier, according to a poll by Dow Jones Newswires.

China early this year set an annual economic growth target of 7.5 percent, down from expansion of 9.2 percent last year and 10.4 percent in 2010.

The government last week cut interest rates for the second time in a month, as part of efforts to avert a hard landing.

The government has also cut reserve requirements -- the amount of money banks must hold in reserve -- three times since December last year.


Chinese Premier Wen Jiabao said Tuesday that stabilising growth was a "top priority", after fresh data raised more worries of a slowdown in the world's second-largest economy.

"As a big developing country, a certain speed of economic growth must be maintained," Wen said. "Stabilising economic growth is not only a top priority, but also a long-term arduous task."

His comments came shortly after the government reported that demand for imports fell more sharply than expected in June, leading to a widening of the trade surplus and stoking concerns about an economic slowdown.

A day earlier China said inflation slowed in June to its lowest level in 29 months, giving the government more flexibility in its efforts to reboot the economy.

Wen said encouraging domestic consumption, diversifying exports and boosting government investment would provide drivers for growth.

"Currently, it is important to promote reasonable growth in investment," he said in a statement.

His remarks came just three days before China is due to announce economic growth figures for the second quarter.

China's economy grew an annual 8.1 percent in the first quarter of 2012 -- its slowest pace in nearly three years.

Economists expect the economy to have grown 7.6 percent in the second quarter from a year earlier, according to a poll by Dow Jones Newswires.

China early this year set an annual economic growth target of 7.5 percent, down from expansion of 9.2 percent last year and 10.4 percent in 2010.

Among the measures already taken to avert a hard landing, the government last week cut interest rates for the second time in a month.

The government has also cut reserve requirements -- the amount of money banks must hold in reserve -- three times since December last year.

Top leaders have urged a move away from exports and the promotion of domestic consumption as the key engine of economic growth.

The nation's trade surplus hit $31.73 billion in June, up 42.9 percent from the same month last year, the General Administration of Customs said on Tuesday.

While exports for the month rose 11.3 percent year-on-year to $180.21 billion, imports climbed just 6.3 percent to reach $148.48 billion, according to the government's data.

"While exports increased at a low level, growth of imports was sharply slower than exports as domestic demand declined due to China's slowing economy," customs spokesman Zheng Yuesheng told reporters.

Compared with May, exports in June declined 0.5 percent and imports were down 8.9 percent.

"The data overall suggest that domestic investment and global growth are slowing," Alaistair Chan, an economist with Moody's Analytics, said in a research report.

Slowing domestic growth would prompt China to further ease monetary policy while at the same time boosting investment, analysts said.

Wen's remarks on Tuesday came after he warned at the weekend that the country's economy faced "downward pressure" and called for more aggressive moves to keep growth on track.

"China will definitely continue to introduce monetary easing policies," said Citic Bank International's chief economist, Liao Qun.

"There may be one interest rate cut and two cuts in the banks' reserve requirement ratio in the second half."

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China voices support for eurozone
Beijing (AFP) July 10, 2012 - China said Tuesday it believed Europe could resolve its debt crisis, as the two sides held a high-level meeting in Beijing that also covered thorny issues such as Syria, Iran and human rights.

The third annual EU-China Strategic dialogue, aimed at paving the way for the next leaders' summit in Brussels this year, came as the eurozone stepped up efforts to tackle its crisis with a 30-billion-euro package for Spain.

"China reaffirmed its support for European integration, Europe's efforts to solve its debt crisis, and the stability of the euro zone," said a joint statement released on Tuesday at the end of the talks.

Europe is China's biggest trading partner and Beijing is a major holder of European debt, so China has viewed the eurozone crisis with alarm.

But the Chinese co-chair of the dialogue, State Councillor Dai Bingguo, expressed strong backing for eurozone efforts to win the battle.

"China is sincere and firm in supporting European efforts to deal with the sovereign debt problem," Dai told reporters.

"We have every confidence in the future of Europe."

His European counterpart to the talks, EU foreign policy chief Catherine Ashton, welcomed China's support and said she hoped the two sides would expand their economic ties.

"We talked about the strong trade and investment links and our aspiration to see them develop," she said.

However while China had in the past said it was looking at ways it could contribute to bailout funds to help Europe, it had not publicly announced any cash injections and no measures were announced on Tuesday.

The dialogue was also focused on sensitive issues between China and the 27-country European bloc, including the 16-month-old conflict in Syria and Iran's nuclear programme.

While France and some other European nations have said that Syrian President Bashar al-Assad must relinquish power, China has stood firm alongside Russia in insisting that the people of Syria must decide for themselves.

Dai said Syria and Iran were discussed between the two sides, but he only reiterated to reporters China's long-held position on sensitive issues concerning other countries.

"We should adhere to the ironclad principle of non-interference in others' internal affairs," he said.

"At the same time it is very important to seek a settlement of various international issues by peaceful means through dialogue and cooperation."

Ashton and Dai said human rights had been discussed, but no details were disclosed.

While not resulting in any major breakthroughs, Ashton said the talks were an important opportunity to help the two sides better understand each other.

"It has (also) enabled us to address issues of regional and international significance to both of us," she said.



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