Investors' concerns over a growth "hangover" from domestic
over-investment are unwarranted, said a UBS report released earlier
this week about China's macroeconomic trends in 2008.
Jonathan Anderson, UBS' senior analyst on global emerging
markets, made this comment in "The 2008 China Macro Almanac" amid
worries that the country's economy is set to overheat, with its
double-digit gross domestic product (GDP) and a monthly consumer
price index (CPI) of more than six percent.
"The current high headline CPI inflation rate is mostly due to
temporary supply-related spikes in a few goods categories," said
the report, adding that the CPI would fall throughout the first
half of 2008.
The optimism of the report comes from the buoyant margins in
most industrial and service sectors. While profits dropped sharply
in heavy industrial firms between 2004 and 2006, they have already
recovered visibly over the past 12 months, the report said.
The report anticipated the country would continue its
double-digit growth despite a tiny slowdown of 0.6 percent in 2008
from more than 11 percent this year, which mainly came from falling
net exports.
A potential recession in the United States could be a major
external risk for Chinese economy, but past experience has shown
that domestic growth is "insulated from even the most aggressive
export shocks", said the report.
(Xinhua, CRI December 1, 2007)
