the 62 basis points of that in 2007. the growth of foreign reserves began to decelerate, and is expected to decelerate further. iv. china ’ s policy stance to be adopted in the next stage an old chinese saying goes “ ruling a country is like cooking seafood delicacy ”, which follows that ruling a country requires the same meticulous efforts as cooking palatable seafood. at present, there are more destabilizing factors in the international economic environment, and problems in china ’ s economy are becoming more apparent ; therefore, we need more patience and wisdom in order to maintain stable and rapid economic development. in the next stage, china will put maintaining stable and rapid economic growth and curbing excessive price hikes as the top priority of macroeconomic management, and put reining in inflation high on its agenda. efforts will be made to maintain the continuity and stability of monetary policy, increase the foresightedness, pertinence and flexibility of the adjustment policy, adopt fine - tuning measures when appropriate according to changing situation both at home and abroad, manage the priorities, pace and intensity of macroeconomic adjustment, encourage growth of some sectors while discouraging it of others, strengthen financial support to key areas and weak aspects of the economy so as to balance the relationship between containing inflation and maintaining rapid economic growth and promote the economy to grow in a sound and rapid manner. the year 2008 marks the 30th anniversary of china ’ s reform and opening - up. in the past 30 years, china successfully transformed itself from a command economy to a market economy, from a closed and semi - closed economy to a fully opened - up economy, making outstanding economic and social advancements. china ’ s gdp has been growing at an average annual rate of 9. 7 percent, and foreign trade 17. 4 percent, ranking the fourth and the third respectively in the world. people ’ s living conditions have achieved overall well off. but china is and will stay in the primary stage of socialism for a long time. there are still a lot of poor people in urban and rural areas ; urbanization is inadequate ; the per capita gdp ranks behind the 100th in the world. constrained by such a reality, the solution to many problems is a long - term and systemic project. when making policies, consideration should be given to china ’ s national situation, development stage and affordability. we have recognized that with increasing economic globalization, financial integration driven by financial innovation and diversification of transfer modes of financial

force of the imported inflation remains strong. second, due to the limited supply, prices of important commodities such as pork have risen rather quickly. third, the rising cost of labor and price adjustment of resources exerted upward pressures on prices. the cost of labor and the imported inflation are reinforcing with each other resulting in spiraling prices. 2. the impact of sub - prime mortgage crisis on china ’ s economy cannot be ignored. although the sub - prime mortgage crisis has a limited direct impact on china ’ s economy, it can never be ignored. first, the u. s. economic growth of and the growth of china ’ s export are strongly and positively related, and the lower growth of the u. s. economy will most likely affect china ’ s export and its economic growth. second, uncertainties in capital flows have risen and a large amount of international capital flew into china, as a result of successive cuts in policy rates by the federal reserve, the continuing depreciation of the u. s. dollar and the turmoil in the international financial markets. third, the continuing deprecation of the u. s. dollar increased the prices of global commodities denominated in the u. s. dollar, putting comparatively huge imported inflationary pressures on china. fourth, china ’ s foreign exchange reserve management faces big challenges after the sub - prime crisis. changes in major international reserve currencies, such as the euro and the u. s. dollar are becoming more and more unpredictable, thus complicating the management of china ’ s foreign exchange reserves. fifth, the inflationary pressure and the sub - prime crisis has heightened the moderation risk of china ’ s economic growth. external shocks constitute the greatest risk this year for china ’ s economy, which has become a major pare of the global economy. although the inflationary pressure and the sub - prime crisis have negative impact, they will not change the fundamentals of china ’ s economy, which will maintain a rather rapid growth rate. iii. china ’ s recent monetary policy the chinese government has placed anti - inflation as its top priority for a long time. in light of the apparent movements in the price level, at end - 2007 china made it a top priority to “ prevent rapid growth from turning into overheating and to prevent structural price rises from becoming generalized inflation ” in macro adjustment policies. recently, china stressed once again to put maintaining stable and rapid economic growth and curbing excessive price hikes as the