The Hindu Business Line : China growth to slow down 'moderately'

BEIJING: Impacted by a global economic slowdown and the recent devastating earthquake, China's economic growth might slow down moderately this year though likely to remain high, the country's central bank said on Saturday.

The economy would also be affected by the snowstorm, the worst in half-a-century which affected many parts of China early this year, apart from the magnitude 8 quake, the deadliest in three decades, that has wrought havoc in southwest Sichuan.

In its report, the Peoples Bank of China (PBC) said the government would continue with the tight monetary policy and properly control bank credits this year - measures aimed at reining in the inflation which was 8.5 per cent in April, hovering around a 1 2-year monthly high of 8.7 per cent recorded in February. Food prices accounting for more than a third of the Consumer Price Index, have been the main driver of inflation.

The government has been stepping up supplies of grain, pork, staple meat in China and other food items and imposed price controls. The government has identified inflation as its biggest concern.

More priority should be given to curbing price rises and preventing inflation, the PBC said. It suggested increasing the supplies of grains, edible oil, meat, eggs and vegetables to rein in the food prices. The PBC said post-quake recovery work was an ar duous task, according to the state-run Xinhua news agency. A freak winter early this year had caused a direct economic loss of 151.6 billion yuan (about $20.8 billion). Individual housing credit risk, which had triggered a U.S. sub-prime crisis, would b e under control in the short term, the PBC said.

The PBC report said the default risk caused by inadequate economic ability to repay the housing loans were relatively small in China, while most borrowers had good credit. The average proportion of down payment in housing loans was 37.2 per cent while o nly 3.7 per cent of the surveyed house buyers were unable to repay the loans in time because of funds shortage, it said.

The report said the country's commercial banks could face larger risks from borrowers who repay their housing loans in advance due to interest rate hikes and income rises, adding uncertainties to the banks fund use plan. - PTI

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