Economy

Policy discrepancies make China's macro control difficult

(Xinhua)
Updated: 2011-07-02 13:56

BEIJING - The differentiated economic policies of the world's major economies have increased the difficulty for macro control in China and other developing countries, said Ma Delun, vice governor of China's central bank, on Friday.

The different or even contradictory macro economic policies of the world's major economies have added to the economic complexity faced by developing countries and created great pressure of imported inflation around the globe, Ma said in a speech posted Friday on the website of the People's Bank of China (PBOC), the central bank.

Related readings:  Markets get a boost from June PMI data  China manufacturing PMI hits 50.9% in June  PMI of manufacturing sector declines in May  Markets boosted by lower PMI - May 3

Ma blamed such a global economic paradox on the diverse domestic economic situations in the the various economies and their varying positions in global economy.

He said the extreme turbulence triggered by the global financial crisis has eased and the fundamentals of the world economy have been supported, as developed nations are in slow and intricate recovery while emerging economies maintained robust economic growth.

The vice governor's remarks come as China is battling surging inflation with a series of economic tightening measures.

The Consumer Price Index (CPI), a main gauge of inflation, shot up to a 34-month high of 5.5 percent in May.

Analysts said the PBOC is now weighing the pros and cons whether a hike of the benchmark interest rate will help rein in spiking inflation without causing a sharp decline of economic growth in the world's second-largest economy.

China's manufacturing activities continued to slow in June, according to two different surveys released on Friday.

The official Purchasing Managers Index (PMI) expanded at its slowest pace in 28 months to 50.9 percent in June, according to the China Federation of Logistics and Purchasing. Meanwhile, the HSBC China Manufacturing PMI fell to an 11-month low of 50.1 percent.

A PMI reading above 50 percent indicates economic expansion and means contraction once it drops below 50 percent.