Pressure on China Policy as Economy Slows Further
Saturday, August 14, 2010 16:31
China’s economy kept slowing down even as the CPI rose again in the last month. This situation intensified the debate on whether attempts to tighten policy have gone too far.
As efforts to calm the real estate market and cut energy consumption began to bite. As a result, the rate of increase in industrial production, fixed asset investment and retail sales all fell in July. New bank loans and money supply growth slowed. Inflation jumped above the government target of 3% to 3.3%. However, the factory-gate inflation fell from 6.4% to 4.8%.
According to many analysts, it is said that China was witnessing a controlled slowdown rather than a new reverse. But the economy appears to be decelerating more dramatically than expected a few month ago.
The nation is facing the risk of accelerating slowdown in economy. The central government is likely to come under great pressure to reverse some of the tightening measures, particularly from local government which has strong links to the real estate and energy-intensive industries.
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