World Economic Forum: China growth on track, says Wen JiabaoWen

Jiabao: “Fast growth and low fluctuation was the most salient feature of China’s economic growth”

China’s Premier, Wen Jiabao, has told the World Economic Forum in Tianjin that his country is on track to hit growth targets for this year.

He also called on international leaders to strengthen co-ordination and oppose trade protectionism during the global economic slowdown.

His address comes amid signs that China’s economy may be slowing faster than previously thought.

Manufacturing and export growth have slowed, while imports have dipped.

This has raised concerns about a decline in both external and domestic demand, in turn sparking fears that Beijing may miss its growth target for 2012.

But Mr Wen said: “We are fully confident that we have the conditions and capability to overcome difficulties on the way ahead, maintain fast and stable economic growth and realise development at a higher level and with better quality.

“The economic growth is still within the target range set at the beginning of the year and is showing stabilising signs despite the slowdown.”

The government set a growth target of 7.5% for 2012.

In the run-up to the conference, analysts said the 2,000-plus delegates would be following Mr Wen’s speech closely to gauge how China would sustain its growth amid an uncertain global economic environment.

However, he gave little detail on specific policies designed to stimulate slowing growth.

But he did call for world leaders to work together to boost global growth.

“I hope that the international community will strengthen macroeconomic policy co-ordination, push forward reform of the global governance structure, resolutely oppose trade and investment protectionism, and work jointly for an early, steady recovery of the world economy,” he said.

China’s leaders are used to presiding over an economy that has been the envy of the world. But Premier Wen Jiabao gave his key address to senior business figures at the World Economic Forum in Tianjin against the backdrop of some of the worst economic news China has seen in years.

Weak demand in Europe and America is hitting exports, while China’s own domestic economy appears to be slowing fast too. It all means that growth this year will fall to around seven percent, the lowest in two decades.

Premier Wen and China’s other Communist leaders are preparing to hand power to a new generation in just a few weeks time. The dilemma is whether they should take more measures now to try to stimulate China’s economy.

Two of the biggest drivers of China’s economic growth in the past few years have been the success of its export sector and an investment boom in the country.

However, both these sectors have seen a slowdown in recent times.

China’s exports have been hurt by slowing demand from key markets such as the US and eurozone. And because the economic climate in those two regions has failed to improve, the sector is likely to see slowing growth in the coming months.

At the same time, investment growth in China has slowed after measures to curb lending were introduced.

The state wanted to keep property prices from rising too sharply and forming asset bubbles.

However, there have been concerns that those measures may have backfired.

Prompted by such fears and continued weakness in the global economic environment, China has eased its policies to try and boost lending and investment again.

It has cut interest rates twice since June and also lowered the amount of money that banks need to keep in reserves three times in the past few months.

The measures have seen lending surge.

According to data released on Tuesday, Chinese banks extended 703.9bn yuan ($111bn; £69bn) in new loans in August. That is up from 540bn yuan in July.

Last week, the government also approved infrastructure projects worth more than $150bn.

Analysts said the increase in lending and a push for new infrastructure investment was likely to help boost growth.

“This is basically consistent that the policy stance is much more proactive and more loose than before, because they saw the risks to the economy,” said Zhiwei Zhang, chief China economist at Nomura.

“I think we’ll continue to see infrastructure spending is pretty strong. We’re predicting a pretty sharp recovery in the fourth quarter, a very strong rise,” he added. –BBC News