With an eye on inflation, growth of Chinese economy slows
A growth of 9.5 in the second quarter (compared to 9.7 in the first quarter). Shanghai and Hong Kong stock exchange recover ground. But inflation remains at 6.4, prices for foodstuffs rose by 14%, pork 57%. Fears of social unrest. International Monetary Fund, Lagarde chooses the Chinese Zhu Min as vice-director.
Beijing (AsiaNews / Agencies) - The Chinese economy grew by 9.5 in the second quarter, while inflation continues to rise. This growth is higher than many analysts had expected, but lower than the first quarter.
The National Statistics Office said today that second quarter growth was of 9.5 on an annual basis, but it is less than the 9.7 of the first quarter.
Meanwhile, inflation has reached 6.4% - a figure much higher than the 4% forecast by the government - while the prices of foodstuffs have risen by an average of 14% and those of pork by 57%.
The slight increase - although less than the previous quarter - heartened many investors in the Chinese economy, the Shanghai and the Hong Kong Stock Exchange rebounded after dropping in previous months.
In an attempt to control inflation, this year the government raised the rate of interest on loans 5 times and has increased the level of reserves for banks. Premier Wen Jiabao has always reiterated that price stability remains the highest priority.
All of these cautionary measures, however, clash with a weak domestic demand and decreased demand from U.S. and Europe, marked by economic crisis, which has reduced the volume of exports.
The shrinkage of the domestic and foreign market, coupled with inflation, are likely to trigger even more discontent and social unrest.
The International Monetary Fund predicted last month that in 2011 China’s economy would grow by 9.6%, at least four times the growth of advanced economies.
It is also for this reason that the new director of the IMF, Christine Lagarde, appointed China’s Zhu Min, her vice-director. Zhu was vice-governor of the Central Bank of China and IMF advisor.