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Economic Growth Cooling Down
Cover Stories Series 2012> Economic Growth Cooling Down
UPDATED: January 29, 2012 NO. 5 FEBRUARY 2, 2012
Maintaining Growth

China's GDP grew 9.2 percent in 2011, a remarkable achievement outshining many other countries. However, the current condition of the national economy is less than appealing. The sequential quarterly GDP growth rates for 2011 stood at 9.7 percent, 9.5 percent, 9.1 percent and 8.9 percent, showing a trend of deceleration. A consensus has been made that stabilizing growth should be the primary goal for China's economic development.

Judging by international and domestic situations, it will be difficult to reach this goal.

First, the European debt crisis and the deteriorating U.S. economy have taken their tolls on the Chinese economy, and it is now still difficult to estimate the scale of their influence.

Second, the external environment for the development of the real economy remains tough. A recent report by the Development Research Center of the State Council pointed out Chinese enterprises are stuck in the most difficult period since the beginning of this century. Many companies are seriously short of capital, which gives rise to many problems in their daily operation and production.

Third, the Central Government is facing enormous pressures in terms of policymaking. Although it has managed to control the consumer prices at a relatively satisfactory level, further pressure from rising prices is inevitable.

Fighting against inflation remains a problem that needs constant attention, and the runaway prices might restrict the government from making proactive economic stimulus policies.

There are, however, a number of positive factors. The decreasing economic growth rate has caught the attention of the Central Government. In 2012, China will continue its prudent monetary policy and adopt a proactive fiscal policy, which will provide a much more relaxed environment for economic growth. In the meantime, the downward trend of growth in 2011 is interpreted as a soft landing brought about by the country's macro economic readjustment. The fundamentals for long-term steady and relatively fast economic development have not changed, laying a sound foundation for the steady development of the national economy.

In the next few years, urbanization, industrialization and marketization will further improve, offering great impetus for economic acceleration. Urbanization significantly increases individual consumption. China is conducting industrial restructuring, and the emerging industries are developing at a fast speed, providing new momentum for the future economic development. It is also striving to improve its marketization, in order to build a more open, transparent and fair market economic system.

We firmly believe the Chinese economy will maintain a sound and relatively fast growth, and make fresh contributions to global economic recovery in 2012.

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