Page last updated at 06:47 GMT, Thursday, 17 July 2008 07:47 UK

Slowing exports curb China growth

Chinese factory workers
Chinese exports have been a key driver of the economy

Chinese economic growth slowed in the second quarter of 2008, constrained by slowing demand for exports, rising prices and the high cost of credit.

The National Bureau of Statistics said the economy grew at an annual rate of 10.1% in the three months to June, down from 10.6% over the previous quarter.

If it keeps growing at a double-digit pace, then China may overtake Germany as the world's third-largest economy.

Beijing has been trying to curb rising food costs amid fears of social unrest.

Consumer price inflation also cooled to an annual rate of 7.1% in June - a decline from 7.7% in May.

But with producer prices rising to an annual rate of 8.8% in June - the fastest pace of growth since the mid-1990s - the expectation is that the government will go further to make sure that these costs are not passed on to consumers.

"While inflation has been easing, it is still at a fairly high level," said Li Xiaochao, the statistics bureau's spokesman.

"If prices stay high for a long period, it's not good for the stable development of the economy and will affect people's lives, especially those with low incomes.

"So we have to continue with price controls to control inflation," he added.

Analysts considered that the growth figures were in line with expectations and despite signs that the economy has peaked, double-digit growth is still expected for the full year.

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