Risks of Overheating is Over for China

From Economic Observer Online:

China has averted the threat of its economy overheating, concluded a recent report issued by China’s State Information Center (SIC) on the country’s present economic situation.

The report also projected that the Chinese economy would likely to slow down further in the second half of this year.

Is the Chinese economy overheating in the first place? The question has drawn different answers from economists, with one camp maintaining that it has since 2003, while another that China was still developing and if its economic growth dropped too much too fast, the consequences would be more severe than overheating.

With the latest report revealing that the economy had been contracting marginally for seven months straight, some quarters started to express optimism that Chinese regulators might relax the tight macro-controls imposed since last year to prevent overheating.

The EO spoke to economists from the private and public sectors to shed some light on the implications of the report. Those interviewed were Zhu Baoliang, chief economist for the economic forecasting department of the State Information Center; Chen Xingdong, chief economist of BNP Paribas Peregrine in China; and Zhu Jianfang, chief macro-analyst for CITIC Securities.


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