China continues to face significant challenges to its economic recovery, including weak demand for its exports, the head of the main planning agency was cited as saying on Tuesday. The comments by Zhang Ping, head of the National Development and Reform Commission, largely echoed those of Premier Wen Jiabao a day earlier, who said the government would maintain its relatively loose policy stance because the economic recovery was not on solid footing.
"The serious fall in external demand is a pronounced problem for China's economy, and our country is still facing great pressure in the employment situation," Zhang told a session of the standing committee of parliament, according to state radio. Presenting a report on the economy's performance, he said domestic demand was still not strong enough a driver of growth, and that housing prices in some cities had risen by too much.
Zhang added the global economy would take a long time to recover from recession, and that improvement over the long run would involve many ups and downs along the way. The government would make efforts to increase domestic demand and stabilise exports, he said, without elaborating.
The semi-official China News Service had earlier cited Zhang as saying the upward trend of recovery was becoming clearer. Zhang's comments came after Lu Zhongyuan, vice-head of the Development Research Centre, a cabinet think-tank, said Chinese investors had over-reacted to talk of monetary policy fine-tuning and that the recent sell-off in the stock market would be short-lived.
"Stock market confidence has been affected by the over-reaction to recent comments of 'dynamic fine-tuning' by the central bank," said Lu. Despite Lu's optimistic comments, the benchmark Shanghai index fell 2.6 percent on the day, leaving it more than 16 percent below its 2009 peak but still up 60 percent since the start of the year.