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Ed Zhang

Premier Wen Jiabao  has warned that China's economy  could face difficult times in the first quarter, but said  the government was ready to 'fine-tune' monetary policy.
Wen (pictured) said people should be confident the nation would  surmount  economic  hurdles and usher in stable  growth. 
'We have a relatively cool market, which is the core of today's problems,' he told local businessmen during a tour of Hunan  province on Sunday and Monday. 
The premier said China had to deal with the  twin pressures of an economic downturn and high prices, Xinhua reported. Dwindling external demand and rising costs for enterprises made the situation more complicated than after the  2008 global financial crisis, Wen said. 
While the focus of boosting domestic demand would be  stimulating consumption, it  also  required  attracting investment, Wen said. Still, he reiterated that the government's policy was to rein in industries that were heavily polluting, used a lot of energy or suffered from overcapacity, and to curb wasteful construction.
Growth in the world's second-largest economy slowed to 9.1 per cent  in the third quarter last year, down from 9.5 per cent in the second quarter and 9.7 per cent in the first. 
 The official Purchasing Managers' Index (PMI)  - a preliminary barometer of  manufacturing activity - dropped below 50 in November for the first time since February 2009. It rebounded to 50.3  in December. A figure above 50 indicates output is expanding.
Last month, after a three-day central economic work conference, Beijing  set 'making progress while maintaining stability' as its guiding theme for this year .
'We should stabilise economic growth, keep the overall price level basically stable and promote social harmony and stability,' Wen said.
 In response to concerns about a lack of working capital caused by  monetary tightening, Wen said the government would adjust in line with the needs of various industries. 
 'We can't talk about the scale of loans and liquidity on a general level, but should instead analyse the situation of different industries and companies ... one by one,' he said. 
Lin Songli, an analyst with Guosen Securities, estimated that growth in the last quarter of 2011 and this quarter might be even lower than in the  third quarter  last year.
He said spending on investment would be a challenge for local governments given their lack of revenue from land sales in the past year. 
Wang Jun, an economist with government think tank the China Centre for International Economic Exchanges, said  Beijing might  launch a 'major overhaul' of its macroeconomic policies around  the middle of the year to address problems such as  rising costs for manufacturers and  dwindling local government revenues.



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