China's red-hot economy is likely to cool during the fourth
quarter as a result of tightening efforts, a think tank report said
on Monday.
Gross domestic product (GDP) is expected to expand 11.2 percent
in the fourth quarter, according to the State Information Center
(SIC), a think tank under the auspices of the National Development
and Reform Commission.
Economic growth would hit 11.4 percent for the whole of 2007,
slightly below the 11.5-percent increase registered in the first
three quarters of the year, the report said.
The economy is on track for a fifth year of double-digit growth.
The previous full-year growth record was 11.1 percent, in 2006.
The SIC report said the government's macroeconomic policies
should continue to target overheating risks.
The key inflation indicator, the consumer price index (CPI),
would ease to 5.9 percent in the fourth quarter from 6.1 percent
during the third quarter, which would help stabilize the full-year
figure at about 4.6 percent, according to the report.
The CPI rose 4.1 percent year-on-year in the first nine months
and hit an 11-year high of more than six percent in August.
The report said prices of pork and eggs, which contributed
significantly to rises in the CPI, are expected to be contained
during the fourth quarter by a government crackdown on food price
hikes and subsidies offered to pig breeders.
However, it said that inflationary pressure would persist as
grain prices continued to rise, which could have a negative impact
on feedstuff prices. Further, industrial prices could face rising
pressure from recent surges in world crude oil prices. The report
urged the government to closely monitor prices. It said that prices
of dairy products and seafood, which previously rose only slightly,
required particular scrutiny. Otherwise, shortages of these items
could cause price spikes next year, similar to the experience with
pork prices.
The SIC report said consumption would remain buoyant in the
fourth quarter, the result of rising incomes and strong economic
growth.
It said inflation-adjusted retail sales for the whole year would
grow 12.8 percent, 0.2 percentage points more than a year
earlier.
Fixed-asset investment, which contributes more to economic
growth than consumption, would continue to expand in the fourth
quarter. However, the growth of such investment would decelerate as
a result of stricter controls on investment, according to the
report.
Macroeconomic control measures that were announced starting in
the second and third quarters, including interest-rate hikes and
higher reserve ratios for commercial banks, would help curb
investment growth in the fourth quarter.
In the latest move, the central bank on Saturday raised the
reserve requirement ratio for the ninth time this year, pushing the
ratio to a ten-year high of 13.5 percent.
One-year benchmark interest rates have been raised five times so
far this year, and investors expect more interest rate hikes.
The SIC forecast said fixed-asset investment would rise 25.5
percent this year, up one percentage point from a year earlier.
China's exports, another powerful engine of economic growth,
would grow 22.5 percent in the fourth quarter, compared with 28.9
percent a year earlier. Export growth would be slowed by the
decelerating US economy and reduced Chinese export tax rebates that
took effect on July 1, it said.
The report estimated the 2007 trade surplus at US$273 billion,
up almost US$100 billion from the 2006 figure of US$177.47
billion.
The think tank said the government should continue to curb
energy use through tax and price measures, and it also urged the
government to hasten price reform for petroleum products and
electricity.
It also advised the government to tighten fiscal discipline in
the fourth quarter to help cool the economy.
(Xinhua News Agency November 13, 2007)
