China on track to meet 2012 growth target: Wen

TIANJIN, China Tue Sep 11, 2012 6:46am EDT

Chinese Premier Wen Jiabao waits for Egypt's President Mohamed Mursi (not pictured) before their meeting in the Great Hall of the People in Beijing, August 29, 2012. REUTERS/How Hwee Young/Pool

Chinese Premier Wen Jiabao waits for Egypt's President Mohamed Mursi (not pictured) before their meeting in the Great Hall of the People in Beijing, August 29, 2012.

Credit: Reuters/How Hwee Young/Pool

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TIANJIN, China (Reuters) - China is on track to meet this year's target for economic growth and if needed the government could utilize a 100 billion yuan fiscal stability fund to boost growth, Premier Wen Jiabao said on Tuesday.

Wen, speaking at a meeting of the World Economic Forum held in China's eastern port city of Tianjin, sounded confident of keeping the economy on a track of steady and relatively fast growth, despite underwhelming economic data released by Beijing in the past few days.

"China's economic development trend is good, economic growth still remains within the target range set at the beginning of the year, and the economy is stabilizing," Wen said.

He added that the central government would tap a special stabilization fund if needed to support economic activity.

"There is around 100 billion yuan left in the stabilization fund as of this year," Wen said.

China set a 7.5 percent target for economic growth in 2012, but some analysts fear that could be missed as a global slowdown drags down activity in the world's second biggest economy.

Growth in China has slowed for six successive quarters and some investors fear it could slide into a seventh in the third quarter of this year, despite the "fine-tuning" of economic policies that began in November 2011.

Two interest rate cuts, the freeing of an estimated 1.2 trillion yuan ($190 billion) for new lending by cutting required reserve ratios (RRR) at banks and a raft of tax tweaks have so far failed to halt the slide.

Instead China's factories are running at their slowest rate of expansion since May 2009.

Surveys of purchasing managers in the manufacturing sector earlier this month showed concerns growing about new business, suggesting that factories would run inventories down further before they begin to turn production up again.

China said last week that it had approved more than $150 billion-worth of infrastructure projects. That comes on top of the monetary and fiscal easing undertaken since last year.

But some economists fear that will be insufficient to stop growth falling below the official 2012 growth target.

China's last officially declared stimulus package was the 4 trillion yuan ($635 billion) spending plan unveiled in 2008, when global trade ground to a halt and at least 20 million Chinese workers lost their jobs in a matter of months as financial turmoil swept around the world.

Wen said all the initiatives undertaken by the government so far this year were within budgeted expenditure and that Beijing was in fiscal surplus of about 1 trillion yuan in the year to date.

Wen's comments came after China's President Hu Jintao warned at the weekend that the world economy is hampered by "destabilizing factors and uncertainties" and that the 2008/09 financial crisis is far from over.

Hu promised China would do all it can to foster a global recovery by rebalancing its economy.

(Reporting by Aileen Wang and Melanie Lee; Editing by Nick Edwards and Simon Cameron-Moore)

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Comments (1)
bettysenior wrote:
Secretive political system. That is what the west has to watch and where China has only one thing on its mind, to dominate world trade. That has been obvious for over 25 years now to those watching and analysing China’s growth and the background thinkers behind it – great Chinese engineers and scientists. Indeed the greatest Achilles heel in the west is that up to 75% of our leaders are lawyers unlike China that presently has six of their main leaders who are either leading engineers or scientists. The new politburo will see seven out of the top ten Chinese political leaders come from engineering or science.

Until we change our political backgrounds from Lawyers in the west to outstanding scientific and engineering minds we shall never win in the economic stakes of the future. That is a fact but oblivious to western leaders and the majority of their people.

Dr David Hill
World Innovation Foundation
United Kingdom – Switzerland

Sep 16, 2012 8:28am EDT  --  Report as abuse
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