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Economist: China's economy has landed
Updated: 2005-11-03 09:00

China's economy has already achieved its long-awaited landing even with growth rates around 9 percent, the central bank's chief economist said on Wednesday.

The comments suggested no further measures would be needed to hold back Chinese growth and that the central bank now saw little risk of a bust in the world's seventh-largest economy, increasingly a pillar of global growth.

Tang Xu, director-general of the research bureau of the People's Bank of China, also said the yuan would be under pressure to strengthen in the short term and its July revaluation had not yet affected the country's ballooning foreign exchange reserves.

Despite some economists' worries that firms are having too much trouble getting loans, he rejected suggestions that credit should be more freely available.

Speaking to Reuters in an interview, he also played down any imminent threat of deflation.

Asked when the economy would achieve the soft landing that the authorities have been trying to effect for more than two years, Tang said: "It has already landed."

"Inflation has slowed and investment growth has also slowed," he said. "The economy has entered a reasonable range. We believe growth around 9 percent is reasonable."

He was optimistic about next year, too.

Gross domestic product grew 9.4 percent between the third quarters of 2004 and 2005, extending a two-year run of expansion exceeding 9 percent.

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.

One official measure has been to curb credit for overheated sectors -- perhaps too much for some companies.

"Some people are suggesting credit should be expanded but that could be risky because raw material prices are still rising," Tang said, keeping an eye on inflationary pressures.

"And some people say it should be tightened a bit, but credit growth is already lagging behind money supply growth."
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