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Monday, 20 October 2008

China's growth slowing

BEIJING - CHINA'S economy is on a sound footing despite the current global economic turmoil, although growth and tax revenues are slowing, state media on Sunday cited a Cabinet meeting as concluding.

Figures on Monday are likely to show that China's annual gross domestic product growth dipped below 10 per cent in the third quarter from 10.1 per cent in the second quarter and 11.9 per cent in all of 2007.

'Generally speaking, unfavourable international factors and natural disasters domestically have not changed the basic situation of our economic development,' the official Xinhua news agency said, summarising a meeting held by Premier Wen Jiabao.

The worst winter weather in half a century swept southern China in January and February, while a devastating earthquake in Sichuan in May killed more than 70,000.

'Our country's economy has the ability and vigour to withstand risk,' the Chinese-language report said.

Inflation was coming under control, food production was rising and more new jobs were being created, it said.

Yet Xinhua said the effects of the worldwide financial crisis were gradually being felt in China, which would pose 'new problems'.

'Mainly it is the obvious trend of slowing economic growth, falling growth in corporate profit and fiscal income, and continued fluctuations and ebbs in the capital markets,' Xinhua said.

'We must ... adopt flexible and prudent macroeconomic policies, come out as soon as possible with targeted measures for tax, loans and foreign trade, to maintain stable and fairly rapid economic growth,' it added.

Xinhua said the government would increase export tax rebates on clothing, textiles and machinery and raise investment in the agricultural, energy and transport sectors.

China increased refunds of value added tax paid by exporters of textiles and garments as recently as late July to 13 per cent from 11 per cent.

Banks would be encouraged to lend more to small and medium-sized companies, and investment in fixed assets would be maintained at a 'reasonable' level, Xinhua added.

The Chinese government has repeatedly voiced confidence that it can keep its economy and financial markets stable despite in the face of the global meltdown. It has also said it is willing to work with other countries to help tackle the crisis. -- THOMSON REUTERS

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