China may move to boost domestic demand

Zhou Xiaochuan, governor of China’s central bank, hinted at a possible stimulus package to cushion the impact of the global financial crisis on the economy, Reuters reported. Although he believes investment and consumption are proving resilient, Zhou told a Hong Kong television station that it may be necessary "to increase domestic demand further." The government has already cut interest rates twice in recent weeks. China’s third-quarter economic data, due for release on Monday, are expected to show that GDP growth dropped below 10% from 10.1% in the second quarter and 11.9% for 2007 as a whole. Yang Xiong, vice-mayor of Shanghai, said on Thursday that the city’s industrial output growth dropped to 6% in September, having posted 11.5% for the first nine months of the year. In addition, steel and aluminum producers are cutting output in response to falling prices, auto and property sales are weakening and small and medium-sized enterprises are struggling to obtain credit.