China's economic growth will slow slightly in the second half of the year as a result of macroeconomic measures to rein in the economy, but the strong upward momentum is expected to continue, the People's Bank of China said yesterday. In a lengthy second-quarter monetary policy report posted on its website, the central bank said it would closely monitor the threat to the economy from the rise in fixed-asset investment, the rapid expansion of credit, the imbalance in international payments, excessive consumption of energy and inflationary pressure. The bank reaffirmed its policy of keeping the yuan at a reasonable and balanced level, saying the government needed to boost domestic consumption and imports to address the imbalance in international payments and should not rely on exchange rates alone. It said it would continue to use monetary tools to strengthen controls on investment and credit flowing into the booming manufacturing sector and the real estate market. China's economy, the fourth largest in the world, grew by 11.3 per cent year on year in the second quarter, the quickest growth rate in more than a decade. Arthur Kroeber, director of Beijing-based economic research company Dragonomics, said the central bank's only effective tool was to control credit, because it had little influence over other areas of the economy. He expressed concern about rising inflation, saying that although the numbers were low, the upward movement was worrying. 'The trend is much more important than the absolute numbers,' he said. 'The rise over several months is a real concern. It's pretty significant at this moment.' The median estimate of economists polled by Reuters is that the inflation rate rose to 1.6 per cent year on year last month, up from 1.5 per cent in June. Official figures will be released tomorrow. Mr Kroeber said inflation was down at the end of last year, but started to climb again in March. 'That tells me that the economy is continuing to grow rapidly,' he said.