China warns of economic hardships in future

BEIJING - Agence France-Presse

Chinese Premier Wen Jiabao warned yesterday that his nation’s economic rebound was not stable and the world’s second largest economy faced hardships ahead, state media reported.

During an inspection tour of southwest China’s Sichuan province, Wen called for greater efforts to strengthen the vitality and dynamism of economic growth, Xinhua news agency said.

“The economic growth rate is still within the government target range set early this year, and stabilization policies are working,” Xinhua quoted Wen as saying. China’s “economic rebound is not yet stable and economic hardship may continue for a period of time,” he said.

China’s economy expanded during the second quarter at its slowest pace in more than three years as dire problems overseas started to hit home, according to official data released on July 13.

Weakest growth since 2009
The world’s second-largest economy grew 7.6 percent in the second quarter year-on-year, the National Bureau of Statistics said, the weakest since 6.6 percent during the depths of the global financial crisis at the start of 2009.

The weak second-quarter expansion dragged down growth to 7.8 percent for the first half of the year, a period when the debt crisis in Europe has deepened and the U.S. economy has continued to struggle.

The government earlier this month took the rare step of slashing interest rates for the second time in a month. That came after three cuts since December in banks’ reserve requirements, or the amount of money they must keep on hand.

Such cuts are meant to free up funds for lending and thus boost the economy.

Chinese leaders have vowed to take further measures. Wen last week called stabilizing economic growth the government’s “top priority.”

Slowing growth in China is also casting a further cloud over the broader global economy, which is still suffering the effects of the 2008-2009 financial crisis.