• Mainland China's economic growth slowed further to 11.2% (year-on-year) in 4Q 2007 from 11.5% in 3Q as the government further tightened credit and investment growth towards the end of 2007.
  
  
• While the growth of fixed asset investment slowed markedly in December 2007, retail sales continued to grow strongly on the back of steady income growth.
  
  
• In the external sector, export growth slowed further while import growth continued to rise in December, reflecting the persistent appreciation of the renminbi against the US dollar in 2007. For the year as a whole, exports grew 25.7% and imports by 20.8%. Therefore, the trade surplus surged to a record of USD262.2 billion. However, with the US in danger of falling into recession and global growth slowing, mainland China's export growth is expected to decelerate to about 20% in 2008.
  
  
• While consumer price inflation eased slightly to 6.5% in December 2007 from 6.9% in the previous month, it still averaged 4.8% for the whole of 2007, up sharply from 1.5% in 2006. The Mainland will continue to tighten monetary control to keep inflation from rising further.

Economic growth slowed further toward end-2007

Mainland China's real GDP grew 11.4% in 2007, up from the 11.1% in 2006. During the year, real GDP growth dropped gradually from 11.9% (year-on-year) in 2Q to 11.2% (year-on-year) in 4Q, reflecting that the government's monetary tightening was taking effect (Exhibit 1). Despite the recent slowdown, mainland China's economic growth remained strong when compared with those of the past few years (Exhibit 1).

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