Chinese officials expect macroeconomic tightening measures to finally start having an effect in 2008, causing economic growth to drop to 8% from an estimated 11% in 2007, the Wall Street Journal reported. The government has targeted GDP growth of 8% for the past few years but its efforts to rein in the economy have largely failed. Last year, the People’s Bank of China (PBOC) raised interest rates six times and increased commercial banks’ required reserve ratio 10 times in a bid to control lending. Xu Lin, director-general of fiscal finance at the National Development and Reform Commission said that inflation will remain a major challenge in the year ahead. The consumer price index came close to topping 5% in 2007 and Xu hopes price growth can be restricted to 4.6% this year. PBOC Vice Governor Yi Gang said China’s trade surplus and investment are still too high, adding that the bank would act "decisively" to control inflation.
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