Wang Qishan Is Not Confident On Meeting Economic Targets4 July, 2011, 6:07. Posted by Zarathustra
Tags: Economy, Wang Qishan, Wen Jiabao
Wang Qishan, the Vice Premier of China, is not that confident about meeting all the economic targets for the year according to Mingpao.
Speaking at a conference, he said the macro environment both within and outside of China is very uncertain. To meet the overall economic targets of economic growth, rebalancing economic structure and price stability will be very difficult.
This is a much more sober assessment from a senior Chinese official than the one we had from Premier Wen Jiabao, who wrote confidently in the Financial Times on balancing growth and price stability. In fact, this is exactly the point I have been making for quite some months now, that China will have to slow economic growth significantly (call it hard landing or recession if you like) in order to keep inflation under control. Although it is not the outcome that Chinese leadership would like to see, and they are trying very hard to avoid both runaway inflation and significant slowdown of growth, I have stressed that Chinese leaders are not omnipotent. The idea that Chinese leaders can maintain strong economic growth and low inflation at the same time is clearly a wishful thinking.
For now, we are seeing more signs of slowdown, as the latest PMI figures show. The good news is that the price sub-index has dropped, possibly suggesting a lower price pressure towards the latter part of this year. But the consumer price inflation will remain high for now, and home prices have not really corrected as much as the government would hope. As such, the pace of monetary tightening can be slowed down, but outright easing is still out of the question.