CHINA / National
ADB: China should avoid drastic policies to curb growth
(AP)
Updated: 2007-07-26 15:52
HONG KONG – The Chinese government should avoid introducing drastic
tightening measures to curb its rapid economic growth and take a gradual
approach, the Asian Development Bank said Thursday.
The bank also raised its forecast for China’s economic growth this year
to 11 percent from 9.5 percent, partly due to increased public spending
linked to the 2008 Beijing Olympics.
For emerging East Asia as a whole, economic growth this year will likely
come in at 8.1 percent, up from a previous forecast of 7 percent, even as
growth in countries outside of China is expected to moderate slightly,
the Manila-based bank said semiannual Economic Monitor report.
In 2008, the region will likely grow a collective 7.9 percent, it said.
Emerging East Asia comprises Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand, Vietnam, China, Hong Kong,
Taiwan and South Korea.
Lee Jong-wha, head of the bank’s Office of Regional Economic Integration,
said the Chinese government should use gradual measures to curb strong
investment and asset price inflation _ and that so far, it has done so.
“The government should avoid implementing drastic measures, even though
the state would like to calm down domestic demand,” Lee said in a press
conference in Hong Kong.
Lee said Beijing should implement tightening measures “step by step.”
Beijing has launched a series of tightening measures to curb the
accelerating economy over the past year. The latest came last Friday as
China’s central bank raised the one-year benchmark deposit and lending
rates by 27 basis points each.
The government also cut taxes on interest income from 20 percent to 5
percent _ a move seen as to encourage investors to keep money in banks
rather than invest in the surging local stock market.
The banks also projected economic growth for Cambodia this year will
reach 9.5 percent, and in Vietnam 8.3 percent. The slowest economic
expansion in east Asia is expected from Thailand, with a GDP growth rate
at 4 percent.
It also predicted Japan’s 2007 economic growth at 2.3 percent.
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