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'Think tank tips China growth at 9.5% in H1'

The Chinese economy is expected to grow 9.5% in the first half of the year and a hard landing is "extremely unlikely", state media reported on Thursday, citing a government think tank.

india Updated: Jun 30, 2011 17:28 IST

The Chinese economy is expected to grow 9.5% in the first half of the year and a hard landing is "extremely unlikely", state media reported on Thursday, citing a government think tank.

Inflation in the country, which has been spiralling and has sparked fears of social unrest, is forecast to rise 5.3 percent in the first half, the State Information Centre said in a report, according to the China Securities Journal.

"Currently the slowdown in China's economic growth and rises in prices are both within a controllable range," the think tank said.

Inflation in the second half of the year may slow down to between 4.5 and 5.5% due to the government's tightening measures and international market conditions, it added.

"It is extremely unlikely that the slowdown in China's economic growth would turn into a hard landing, as long as the world economy does not slip into a second recession," it said.

The world's second-largest economy expanded 9.7% in the first quarter, slightly lower than the 9.8% growth rate posted in the final quarter of 2010.

The consumer price index - a key gauge of inflation - rose 5.5% in May, a near-three-year high.

Chinese Premier Wen Jiabao said this week it would be difficult to keep inflation under Beijing's target of four percent for 2011, adding that fighting rising prices remained a top government priority.

Stability-obsessed Beijing is anxious about inflation and its potential to trigger social unrest. It has been restricting bank lending and raising interest rates to stem a flood of liquidity into the economy.

The think tank suggested the central bank should use rate hikes more often in the second half of the year, given the actual deposit interest rate is now negative due to high inflation, the China Securities Journal said.