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Economy may slow down but no double dip: Chinese Central Bank

The Chinese central bank today said it is possible for economic growth to slow but ruled out any chances of a "double dip".

business Updated: Jul 27, 2010 21:31 IST

The Chinese central bank on Tuesday said it is possible for economic growth to slow but ruled out any chances of a "double dip".

The ongoing economic development has revealed signs of a slowdown in the country's growth, though the fundamentals remain strong, the People's Bank of China said in a statement.

It made this judgment based on the purchasing managers' index for the manufacturing sector remaining above the boom bust line of 50 per cent, although the pace of the increase has decelerated. Also, investment and retail sales continue to show strong growth, plus the global economy is improving.

Further, the European sovereign debt crisis is not expected to have a large impact on the Chinese economy, it said. The country's gross domestic product increased 10.3 per cent year on year in the second quarter of this year, slower than the 11.9 per cent growth in the first quarter and 10.7 per cent expansion in the last quarter of 2009, official media quoted the statement as saying.

The central bank report said the Q2 slowdown in GDP growth is a correction following the earlier excessive expansion and also a result of the government's macro regulations that aimed at curbing steep property price increases, easing local government debt risks and avoiding possible inflation. "It is good for rebalancing the economic structure and achieving a sustainable economic growth," the report said.

The central bank said the country's new bank lending would be within the 7.5 trillion yuan (USD 1.1 trillion) target in 2010 if the increase is maintained at the June level. The new yuan-denominated loans for the first half of the year reached 4.63 trillion yuan, down by 2.74 trillion yuan compared with the same period last year.

First Published: Jul 27, 2010 21:27 IST