A official told a business development forum at the weekend
that though China's economy continues to grow very rapidly, the
government should take measures to prevent either excessive
inflation or deflation next year.
"This year China's economy has still been developing at a very
high speed. The government should keep paying attention to
macroeconomic adjustment and control," said Yi Gang, assistant to
the bank's governor, at the 2006 Forum on the Development of
China's Enterprises.
This forum was organized by the Development Research Center of
State Council's Enterprises Institute and lasted from December 17
to December 19, according to Securities Daily on
Monday.
Yi said the growth rate of China's economy this year is around
9.4 percent, a level that has lasted for three years.
He said: "Both the consumption price index and the price index
of production materials have show that the price growth rate has
slowed down."
According to the National Bureau of
Statistics, from January to October, the price index increased
1.9 percent and is expected to remain under 2 percent at the end of
2005, lower than the figure of 3 percent predicted by many experts
at the beginning of the year.
The investment of capital assets is a key factor in accelerating
economic development, and its growth rate is estimated to be 27
percent this year.
"The rapid growth of a favorable balance of trade is another key
factor to promote economic growth," he said.
From January to October, the favorable balance of trade reached
a record US$80.4 billion.
He said: "The favorable balance of trade has lasted ten years.
Between 1994 and 2004, the highest figure was US$40 billion and the
average annual figure was about US$20 billion. This year it has
taken 4 percent of GDP and this will greatly influence our economy
in the future."
According to him, the gap between M1, the sum of money in
circulation and in deposits, and M2, M1 plus fixed deposits, is
larger than usual.
Due to rapid growth in enterprises' fixed deposits, M2 increased
18 percent from last year, but M1 went up by only 12 percent; the
gap between their increases widened from around 4 percentage points
in the previous three years from 2001.
The issuance of short-term financial securities has also
accelerated the growth of M2, and the figure this year is US$14.7
billion.
The interest rate of the whole market continues to fall
slightly, said Yi, and fluidity is weaker than before.
(China.org.cn by Wang Ke, December 21, 2005)