This is just weeks after asserting (or emphasizing?) the contrary. The Chinese are really dancing on a tightrope, here. I suppose the rest of us are, too....
China to keep policy loose as economy faces new woes
Mon Aug 24, 2009 8:22am EDT
BEIJING (Reuters) China will maintain its stimulative policy stance because the economy, far from being on solid footing, is facing fresh difficulties, Premier Wen Jiabao said on Monday.
In a downbeat statement on the government's website following a trip to the eastern province of Zhejiang, known as a hotbed of private enterprise, Wen said Beijing would ensure a sustainable flow of credit and a "reasonably sufficient" provision of liquidity to support growth.
A drop in new yuan bank loans in July to 356 billion yuan ($52 billion), compared with an average of over 1.2 trillion yuan in each of the first six months of the year, has created worries among some analysts that the recent rebound in growth could be knocked off track.
"We must clearly see that the foundations of the recovery are not stable, not solidified and not balanced. We cannot be blindly optimistic," Wen was cited as saying on www.gov.cn.
"Therefore, we must maintain continuity and consistency in macroeconomic policies, and maintaining stable and quite fast economic growth remains our top priority. This means we cannot afford the slightest relaxation or wavering."
China still faced great pressure from the slowdown in demand for exports, Wen said, adding that it was difficult to boost domestic demand in the short term to fill in the gap--despite the boost from the government's 4 trillion yuan ($585 billion) stimulus package.
Thanks to the pump-priming, annual economic growth in the second quarter accelerated to 7.9 percent from 6.1 percent in the first three months of the year
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