China faces dilemma in managing economy

China’s central bank said last Thursday the nation’s blistering economic growth would gradually level off, adding it faced a dilemma in how to manage the economy.

“The next stage of the economy will gradually stabilise and continue growing on the basis of rapid recovery,” the People’s Bank of China said in a statement on its website.

It added that China faced a dilemma in its macroeconomic control policies, referring to measures implemented to rein in property prices and to curb bank lending, amid fears the world’s third-largest economy is running out of steam.

The bank said the foundation for global economic recovery was weak, referring to the European financial crisis and tepid recovery in the US. It added there were still difficulties in the development of domestic demand, and that internal consumption had to be expanded and income distribution improved.

The comments echo those made by China’s Premier Wen Jiabao last month, when he warned of economic difficulties ahead.

China’s economic growth slowed to 10.3 per cent in the ­second quarter of the year, as massive stimulus spending was scaled back and moves to rein in soaring property prices started to bite.