China's economic growth slows in 2nd quarter

BEIJING, July 17 (Kyodo) - China's economic growth slowed slightly in the second quarter, according to government figures released Thursday, partly due to a fall in demand for its exports, particularly in the United States and Europe.

The country's economy grew by 10.1 percent in the April-June period, compared with the same period last year, after achieving growth of 10.6 percent in the first quarter, bringing its economic growth over the first six months of the year to 10.4 percent.

A statement from the National Bureau of Statistics also revealed that inflation, one of the government's key economic concerns, hit 7.9 percent in the first half of the year.

Li Xiaochao, a spokesman for the bureau, told reporters the first half figures showed that the government is succeeding in slowing growth to produce more stable economic development.

But he admitted that inflation, fueled by rapidly rising prices for commodities such as grain and oil, is a major concern.

He also revealed the government has no immediate plans to lift price controls on some products, particularly basic foodstuffs, to lessen the impact of price rises on China's rural poor.

Analysts say rising food prices are a particular worry for the government because the poor are hit the hardest, fueling fears of social unrest.

Li said, ''High prices are having a dramatic impact on people's lives. Therefore, the price controls will continue.''

''China's economy is facing many difficulties and challenges, particularly because of the international economic situation, but it is still producing stable and fast growth,'' he added.

China's economy expanded by 11.9 percent in 2007, the fifth straight year of double-digit growth.

The latest figures give further evidence that the country's economy is relying less on exports for growth, while domestic demand and consumption rise.

Retail sales increased by 21.4 percent in the first half of the year compared with the same period last year, totaling 5.1 trillion yuan ($747 billion).

The government revealed earlier this month that the country's trade surplus with the rest of the world fell by 11.8 percent in the first half, due to slowing demand for Chinese exports abroad.

The rising value of the yuan against the dollar is also making Chinese-made goods more expensive overseas. It has increased in value by over 20 percent against the U.S. currency since the peg with the dollar was scrapped three years ago.

The statistics bureau figures also show the huge gap in income continues between the country's urban middle class and its hundreds of millions of farmers and rural residents.

The disposable income of each person living in the cities averaged just over 8,000 yuan in the first six months of the year, while the total cash income of rural residents in the same period was just over 2,500 yuan.