Current complex challenges

The Chinese economy had scored double-digit growth over the past three years since the yuan revaluated, along with a rising population of newly employed and continuously dropping unemployment rates.

Exports have slowed as expected without experiencing a drastic drop.

The economy seemed to go in the right direction with consumption on the rise to make bigger a contribution to the economy and exporters shifting to turn out better products amid wide-ranging industrial restructuring.

But decision makers had to throw caution against many factors, including the global slowdown and the international financial market turmoil that originated in the U.S. as changes in the rates of major currencies and global prices of energies and grain would both affect the movement of international capital.

Some analysts said the accelerated influx of international capital posed new threats to China's macro control, with the country struggling to tame liquidity.

Some warned the government of the negative effect of a rising yuan, such as harm to exporters, and said the country should take measures to avoid an economic slope.

Others noted the financial risks following the yuan's depreciation, such as the outflow of a large amount of capital.

However, economists agreed the country's current exchange policy was appropriate in addressing the imbalance of international payments, and measures had been effective, as seen from the decelerating trade surplus.

(Xinhua News Agency July 22, 2008)