The World Bank (WB) on Wednesday raised its forecast for China's
2007 economic growth to 11.3 percent from an earlier 10.4 percent,
and said the country's macroeconomic prospects remain good.
China's gross domestic product (GDP) grew by 11.5 percent in the
first half of 2007 from the same period last year.
The bank also predicted the galloping Chinese economy would slow
down to 10.8 percent in 2008.
Wednesday's report held that China's macroeconomic prospects
remain good. It said China's exports would continue to be
competitive despite cost pressures, while profit and credit growth
are high at home, with investment being likely to expand strongly
and consumption expected to remain solid.
The report also said China's economic growth pattern remains
unchanged, as continued strong external trade and an
investment-driven recovery in domestic demand are still major
factors behind the rapid growth.
According to WB's estimates, the net external trade has
contributed more than a quarter to the aggregate growth, remaining
at a high level as in the second half of 2006.
The trade surplus is adding to domestic liquidity and
contributing to steady asset price increases, share prices in
particular, said the report.
The main macroeconomic task emains containing the rising trade
surplus, said the WB report.
The report held that China's consumer price index (CPI), which
rose 6.5 percent from a year ago in August, is expected to
gradually ease later in 2007 despite upward risks.
Data released by the National Bureau of Statistics (NBS) on
Tuesday showed that the accumulative increase of CPI, a sign of
overheating of the already hot economy, reached 3.9 percent in the
first eight months, well above the annual goal of three percent set
by the government for 2007.
The report said although the CPI has risen to a record 11-year
monthly high, it is largely attributed to higher food prices.
Food prices ballooned by 18.2 percent in August, while prices of
non-food products rose 0.9 percent, said the NBS.
The government has taken various measures to ease liquidity and
prevent the economy from overheating, such as the planned issuance
of 1.55-trillion-yuan special treasury bonds.
The Chinese central bank warned in its second-quarter monetary
report that China's economy remains on the brink of overheating
following another 12 months of soaring industrial output and money
supply.
The WB also said the recent turmoil in the international
financial markets triggered by the U.S. sub-prime mortgage problems
is likely to have an adverse impact on the global economy.
It continued to say China is "well-placed to deal with a
possible impact", although China would be significantly affected by
an economic slowdown in key markets due to its heavy reliance on
exports.
According to the report, a key challenge for China remains the
restructuring of the growth pattern.
It calls for a package of economic policies, including monetary,
fiscal and financial policies, to tighten liquidity, increase
capital costs, limit investment growth and stimulate consumption
demand while encouraging investment in services.
(Xinhua News Agency September 13, 2007)
