Beijing: China's economic growth may ease to below 9 percent in 2012, partly due to a weak global economy, a senior Chinese foreign exchange official said on Tuesday, backing market expectations that the world's No 2 economy is set for a mild easing.
But even as the economy cools, Huang Guobo, the chief economist at China's currency regulator, the State Administration of Foreign Exchange, told a forum that inflation is still a policy focus for Beijing in coming months.
"The Chinese economy is facing serious challenges despite strong growth," Huang said.
"The weakening global demand for Chinese exports will be a challenge...Next year, if the situation continues, China's growth rate may fall below 9 percent."
Huang's forecast for slowing activity is in line with market expectations. A Reuters
poll in July showed analysts expect China's economy to grow 8.8 percent in 2012, down slightly from 9.3 percent in 2011.Also See: 10 business fakes made in China
However, the mild slowdown in growth is still well within Beijing's threshold. Under China's five-year economic blueprint ending 2015, China Premier Wen Jiabao said the economy should grow an average 7 percent over the period.
Even so, Huang said inflation would remain Beijing's focus, especially since an increasing amount of hot money will flow into emerging markets, including China, exacerbating price pressures.
"Globally, we see weakening growth. Also, this year, the sovereign debt crisis has worsened, particularly in Europe. This has greatly undermined global confidence and has also caused volatility in the global markets," Huang said.
"Facing such a slowing economy and the sovereign debt crisis, I think there is a dilemma. Fiscal policy cannot be massively used and monetary policy has already been eased."Also See: Chinese, Indian workers most likely to call in 'sick'
Still, the comments from SAFE represent an official acknowledgement that 2012 will be a tougher year.
Many private economists have cut their growth forecasts sharply because of concern that weakening global growth will take a bite out of exports.
Economists see 8 percent as a critical line because growth below that level may not create enough jobs to keep up with China's rapidly urbanising population.