Interesting statements here. China can’t afford politically to allow growth to slow sufficiently to cut employment growth, inflation not withstanding. This stance ultimately weakens the currency, one way or another:

(Bloomberg) China should stick with its tight monetary policy unless the economy’s expansion slows to below 9 percent, a National Bureau of Statistics official said. “Below 9 percent, it means the tightening is overdone and needs to be loosened,” Zheng Jingping, the bureau’s chief engineer, said at a seminar in Beijing today. The economy expanded by 10.6 percent in the first quarter. Premier Wen Jiabao is balancing the risk of a slump in the world’s fastest-growing major economy against the threat from inflation that is close to an 11-year high. A 1 percentage point slowdown in the U.S. economy will take 5 percentage points off China’s export growth, the Chinese Academy of Social Sciences said in a report today. “A reasonable combination for this year is 4.8 percent inflation and 9.7 percent GDP growth,” said Zheng. Inflation may be between 4.5 percent and 5.5 percent, he added. The government aims to cap price gains at 4.8 percent.

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