Positive news fails to lift markets

Updated: 2011-08-06 07:47

By Hu Yuanyuan (China Daily)

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Positive news fails to lift markets

Positive news fails to lift markets

Dong Xian'an, chief economist with Peking First Advisory, sa\74i that China's central bank should be very careful in making any move to further tighten monetary policy.

"As the world's second largest economy, China should boost global confidence with stronger growth, especially when the US and EU economies are facing more challenges," said Dong.

Zhou Hao, China economist at Australia and New Zealand Banking Group, said the European debt crisis and the lower-than-expected growth of the US economy will have limited impact on China's economy.

"China's net exports accounted for about 3 to 4 percent of the GDP, and most exported products have a lower elasticity due to low cost. Therefore, even though the external demand is shrinking, the impact on the country's economy will be limited," said Zhou.

The biggest influence, according to Zhou, is that the central bank's real purchasing power will fall. Inflation, Zhou said, remains the top concern for China's economy, though many economists and analysts believe that inflation, a priority for the country's economy, may have peaked in July.

Wang Tao, head of China economic research at UBS Securities, expects July's consumer price index, a measure of inflation, to stand at 6.4 percent, the same as June's. She said the possibility of another interest hike cannot be ruled out.

Zhang Chunyan in London contributed to this story.

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