China’s Wen: economic hardship ahead

BEIJING, China – Premier Wen Jiabao warned on Sunday, July 15, that China’s economic rebound was not stable and the world’s second largest economy faced hardship ahead, state media reported.

During an inspection tour of the southwest province of Sichuan, Wen called for greater efforts to strengthen the vitality and dynamism of economic growth, Xinhua news agency said.

“The economic growth rate is still within the government target range set early this year, and stabilisation policies are working,” Xinhua quoted Wen as saying.

But China’s “economic rebound is not yet stable and economic hardship may continue for a period of time”, he said.

China’s economy expanded during the second quarter at its slowest pace in more than three years as dire problems overseas started to hit home, according to official data released on Friday.

The economy grew 7.6% in the second quarter year-on-year, the weakest since 6.6% during the depths of the global financial crisis at the start of 2009.

The weak second-quarter expansion dragged down growth to 7.8% for the first half of the year, a period when the debt crisis in Europe has deepened and the US economy has continued to struggle.

Wen’s comments came at an economic planning meeting in the Sichuan capital Chengdu that included officials from several interior provinces where economic growth has lagged behind the coastal regions.

“As we face the problems, difficulties and risks, especially the pressures brought on by a slowing economy, we must also recognise that the basis for economic growth is good … and there is still a lot of dynamism and momentum for economic growth,” Wen said.

Easing inflationary pressures, rising salaries and improvements in livelihood, as well as investment in infrastructure, science and technology and education all boded well for future growth, he said.

Wen further pledged to focus on creating jobs, especially for college graduates, as well as migrant rural workers who are descending on China’s cities in search of jobs.

China earlier in July took the rare step of slashing interest rates for the second time in a month. That came after three cuts since December in banks’ reserve requirements, or the amount of money they must keep on hand.

Such cuts are meant to free up funds for lending and thus boost the economy.

Chinese leaders have vowed to take further measures. Wen last week called stabilising economic growth the government’s “top priority”.

Slowing growth in China is also casting a further cloud over the broader global economy, which is still suffering the effects of the 2008-2009 financial crisis. – Agence France-Presse