01/23/2007, 00.00
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Government to slow growth

Central Bank announces “smaller” 8 per cent target after four years above 10 per cent. Beijing is concerned about growing inflation. The yuan exchange rate should be more flexible but no announcement has been made about a possible revaluation as asked by the US.

Beijing (AsiaNews/Agencies) – China's economy is set to expand by 8 per cent this year, a sharp slowdown from last year's estimated 10.5 per cent growth, while inflation will be held within 3 per cent, the central bank announced at the end of a two-day annual working conference at which the bank's monetary policy for the year ahead was set. The moderate target shows the government aims to further cool the economy after four consecutive years of more than 10 per cent expansion.

Beijing is concerned about inflation and in March of last year, it had adopted measures designed to slow growth and reduce money supply like limits on lending to property and certain industrial projects it believed were experiencing overcapacity.

Beijing is set further increase the flexibility of the yuan exchange rate but did not say whether that includes another revaluation of the currency as Washington has called for so that its real value would be realigned vis-à-vis the dollar and so enable the US to reduce its trade deficit with China and reduce the competitiveness of Chinese goods.

Beijing already pegged the yuan against  the US$ at 8.28 in July 2005 . That was followed by a further limited adjustment that brought it under 7.80 yuan to the dollar.

China's foreign exchange reserves hit a record US.066 trillion at the end of last year.

Its trade surplus jumped 74 per cent in 2006 to a record US7.47 billion amid a 27.2 per cent surge in exports.

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