Chinese Premier Wen Jiabao Sends An Ominous Warning On The Economy

[pampango]

2. Sydney (Aus) Morning Herald: China ready to act after tough first quarter

CHINA has warned its economy may struggle in the early months of this year due to ''difficult'' conditions but stressed it was ready to fine-tune monetary policy to limit any fallout. The policy shift to support growth was announced by the Chinese Premier, Wen Jiabao, and helped buoy global markets, following better-than-expected activity in China's manufacturing sector.

China has been trying to cool an overheated property market, by adjusting rates and borrowing criteria, but there have been mounting concerns growth is tailing off too fast, threatening the global recovery.

In comments published this week, Mr Wen said the first three months of the year would be ''relatively difficult'' and that ''the market is relatively cold - that's the core of current problems''.

The slowdown in Europe and the US has hit China, which is dependent on exports. At the same time, Beijing is anxious to avoid reigniting inflation, which hit a three-year high of 6.5 per cent in July but has since slowed to 4.2 per cent. ''We face problems of weakening external demand and rising costs for companies,'' Mr Wen said. ''We are now in a situation where pressure from an economic downturn and high prices both exist.''

http://www.smh.com.au/business/china-ready-to-act-after-tough-first-quarter-20120104-1pl3w.html

Sounds like they are trying to slow down the economy to control inflation, but don't want to slow it down too much.