China's booming economy is poised to slow gradually, according to bankers gathering today to discuss the Asian giant's impact on the global economy.
The growth of China, where surging demand for oil is pushing up energy prices and threatening economic growth elsewhere, presents new challenges for central bankers from rich and developing countries alike.
China is under intense pressure to loosen its fixed currency regime as a way to start rebalancing global economic growth.
Several officials, including China's deputy central bank governor, said however that China's economy was poised for a gradual slowdown after powering ahead at a 9.5 per cent annual rate in the first quarter.
A cooling off is needed to prevent inflation from building in China and to reduce stresses on world growth. "I think the Chinese economy has been performing well, and the growth rate and inflation and other indicators of the Chinese economy have been going smoothly," said Li Ruogu, deputy governor at the People's Bank of China.
Bank of Japan Governor Toshihiko Fukui said a flexible yuan would not be a quick fix for a global economy facing large trade imbalances and polarised growth patterns. A better regulatory system also is needed, he said.
Joseph Yam, chief executive of the Hong Kong Monetary Authority, said that money and credit growth have slowed. "The prospect of a soft landing is quite good," he said.
European Central Bank President Jean-Claude Trichet, who chairs the G10 meeting, will give a news conference later today to report on the global economy.
The 50 per cent increase in the price of crude oil over the past year, driven by strong demand from China, India and other developing nations, is proving a drag on world growth.
The International Monetary Fund last month forecast that global growth would ease to 4.3 per cent this year. That is down from 2004's robust 5.1 per cent GDP growth, the fastest in three decades - but still well above its 20-year average.