A senior economist with China's top planning agency is
recommending the government provide incentives for the country's
home buyers and raise its warning level on a key inflation
indicator with a prediction of further steep price rises next
year.
China's consumer price index (CPI) would likely rise 4.3 percent
for the whole of this year, exceeding the government-set alarm
level of three percent, Wang Xiaoguang of the National Development
and Reform Commission (NDRC) predicted on Tuesday.
The key inflation indicator would likely rise 3.5 percent next
year, said Wang, head of the economic operation and development
section of the NDRC's Research Institute of Economy.
He suggested the government raise the annual warning level to
four percent. Observers believe factors behind the mounting
inflation in the second quarter of this year would continue to
affect the economy next year.
China's CPI rose 6.5 percent in August, which was a direct
result of price hikes for foodstuffs. A short supply of pork, which
was due largely to a disease outbreak in some areas, contributed
significantly to the price hikes, but it is believed food prices
are likely to stabilize.
However, Wang also emphasized that the government's
macro-economic control efforts should focus on runaway real estate
prices instead of prices of consumer goods.
Measures should include incentives for people to buy their own
homes, while home buying for investment should be brought under
rigid control.
He also recommended purchases by foreigners be strictly
restricted and a taxation policy for real estate should be drafted
as soon as possible.
It has been widely reported in China that speculators from
abroad have helped shore up long-term, excessive price hikes on
housing, threatening the stability of the financial sector and even
of the national economy.
Wang forecast gross domestic product (GDP) would reach 24.3
trillion yuan for the year, representing a real-term growth of 11.5
percent over last year. The growth rate would be 0.4 percentage
points higher. Fixed assets investment would increase by 29 percent
year-on-year to 12.1 trillion yuan. The trade surplus would reach
257 billion U.S. dollars at least, Wang predicted.
Next year would see China's GDP exceed 28 trillion yuan, up 11
percent at least. Fixed-assets investment nationwide would amount
to 15.1 trillion yuan, up 25 percent, while retail sales would
reach 10.5 trillion yuan, up 16.5 percent. The trade surplus would
increase to 308.4 billion US dollars. The unemployment rate would
be below 4.5 percent.
(Xinhua News Agency October 23, 2007)
