Wen Jiabao

Wen warns of more economoic hardship

PUBLISHED : Monday, 16 July, 2012, 12:00am
UPDATED : Monday, 16 July, 2012, 12:00am


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Premier Wen Jiabao has conceded the mainland's economy has yet to see a sustained rebound and may face a prolonged period of hardship.

His warning comes two days after the world's second largest economy posted the weakest quarterly growth in three years.

However, the recent trend of easing consumer price inflation provides more room for macroeconomic policy adjustments to stimulate the slowing economy, Wen said.

'Currently, economic growth is still within the range we expected early this year, and policies to support growth has borne fruit as growth is slowing, but stabilising,' Xinhua quoted him as saying after a visit to Chengdu , Sichuan province, at the weekend.

'However, we must note that the economy has not set a continuous rebounding trend, so economic hardship may persist for a while longer.'

He urged officials to work hard to ensure the economic development targets set for this year were met.

In March, Wen had announced an economic growth target of 7.5 per cent for this year, an eight-year low, a move economists had said would allow the government to focus on rebalancing the economy.

Beijing last week said the mainland's gross domestic product grew 7.6 per cent from a year ago in the April-June quarter, weaker than the 7.7 per cent economists expected, and a marked slowdown from the 8.1 per cent growth in the year's first quarter. Consumer price inflation dropped to 2.2 per cent in June from 3 per cent in May.

Despite the premier's warning of more challenges ahead, Xinhua quoted Wen as saying the momentum and potential of economic growth remained favourable.

He highlighted good output growth in the agricultural and hi-tech sectors, and said growth in less-developed western and central regions was catching up - a sign of results in efforts to rebalance the economy.

Many economists expect the economy to bottom out soon as the effects of earlier interest rate cuts, expansion of credit availability and speeding up of fixed-asset construction projects kick in. Already, a 41 per cent jump in residential housing sales last month from May is seen as a precursor to a turnaround of the key property and construction sectors.

The turnaround occurred partly due to speculation that Beijing would ease curbs on property sales. Though Wen, earlier this month, reiterated that the curbs are here to stay, it has not stopped homebuyers anticipating a policy easing, or some local officials from testing Beijing's resolve.

The housing bureau of the Zhuhai municipal government on Saturday afternoon convened a meeting and decided to ease measures to control home sales volume and prices, the China Central Television reported. The Zhuhai government denied it the next day.