China confident economy will stabilise

The slowdown in China's economy will stabilise and there is little risk of a double dip recession, the central bank said on Tuesday, amid fears the Asian giant was running out of steam

The world's third largest economy grew 10.3 per cent in the second quarter, compared with 11.9 per cent in the first three months, as government tightening measures started to bite, the People's Bank of China (PBoC) said in a statement on its website

But the economic slowdown will level off and is in fact beneficial for the restructuring of the country's economy and ensuring sustainable growth, it said, adding: "China's economic fundamentals are still very good."

Policymakers will stand by current macro-economic policies, such as those aimed at cooling the property market and reining in rampant bank lending, because the economy is moving in the "expected direction", it added

The bank said the European financial crisis would have an impact on China's exports in the near-term, given the region is China's largest trading partner, but the effect on the overall economy would not be significant

"Even though exports to Europe will weaken in the short term, there is low risk of the crisis having a serious impact on the Chinese economy," the PBoC said

The bank's comments come after Chinese Premier Wen Jiabao said earlier this month that the slowdown in the second quarter was in line with expectations, but warned of economic difficulties ahead. Need to know more about freight melbourne?

"So far this year our nation's economy is continuing to develop in the direction set by our macroeconomic controls," Wen said, according to a report on his government's website

"The progress made has not come easy. Faced with the current situation, we must ... fully anticipate the difficulties and problems ahead and strengthen our awareness of the dangers."