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World Bank raises China's growth forecast to 9.3%
Updated: 2005-11-03 11:44

While that rock-steady performance shows little evidence of a slowdown, the authorities have been aiming not so much at reining in economic momentum as rebalancing it away from its reliance on investment, whose roaring growth two years ago raised fears of a bust.

Government data has since shown slowing investment growth in fixed assets, such as factories and office buildings.

Growth in M2 money supply, a measure of how much cash is available in the banking system, has accelerated in recent months.

Some have seen that as a sign that the central bank has taken its foot off the brake, but Tang said foreign money coming into the country was the cause.

"Rapid M2 growth in recent months was caused by rapid inflow of foreign exchange," he said. The bank's monetary policy was stable.

"The purpose of the stable monetary policy is to keep economic growth on a stable footing," Tang said. "Based on end-September figures, foreign exchange reserves are still growing at a fast pace and I dare not say they will slow down."

The reserves have risen because China has been exporting more than it imports, because foreigners have sent money to the country to invest, and because speculators anticipating appreciation have bought yuan.

"In the short term, there will be upward pressure on the renminbi (yuan) but in the long term it will depend on how the economy performs and on other factors, such as the global economy and productivity." 
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