China Slowdown Looms as Inflation Limits Stimulus, ex-PBOC Official Says

China’s economy is highly likely to slow next year and efforts to spur growth will be constrained by inflation and government debt burdens, said Wu Xiaoling, a former deputy central bank governor.

The government shouldn’t expand monetary or fiscal stimulus because of price pressures and central and local-government debt, Wu said in comments published today by the Financial News, the central bank’s newspaper. Wu is vice director of the finance and economy committee of the National People’s Congress.

The world’s biggest exporting nation faces weakening global demand because of the European debt crisis and U.S. unemployment. China’s officials are still grappling with the side-effects of 2008 and 2009 stimulus measures, including elevated inflation and the risk of bad loans for banks.

Gross domestic product expanded 9.5 percent in the second quarter of this year.

Next year’s slowdown will be caused by factors including reduced overseas demand, measures to alter the structure of the economy and to cool the property market, and adjustments to infrastructure investment, the article quoted Wu as saying.

To contact the reporter on this story: Sophie Leung in Hong Kong at sleung59@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst in Hong Kong at ppanckhurst@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.