The economy is expected to grow close to 11 percent next year
but inflation will remain a major concern, a top think tank said
yesterday.
Gross domestic product (GDP) growth will be an annualized 11.6
percent this year, the fifth consecutive year that the country
would have achieved double-digit GDP growth, according to the
annual "blue book" on economic forecasts by the Chinese Academy of
Social Sciences (CASS), which was released yesterday.
The consumer price index (CPI), the main gauge of inflation, has
risen strongly in recent months, reaching a decade high of 6.5
percent in both October and August.
The CASS forecast it may be an annualized 4.5 percent this year
and 4 percent next year.
"The first priority for China's macro control policies in 2008
should be to contain the fast rises in consumer and asset prices
and ease inflationary pressure," the book said.
The trade surplus is expected to widen to $290 billion next year
from $260 billion this year, but export growth will slow to 20.5
percent from 25.1 percent thanks to the rising value of the yuan
and the government's efforts to rebalance trade, such as cutting
export rebates.
Import growth will rise to 22.9 percent from 20.3 percent, the
CASS forecast.
The government has taken a series of measures this year to
reduce exports, including reducing or canceling export rebates for
some products and imposing duty on exports of some resource
consuming products.
"They were effective in the first half of this year," said Pei
Changhong, director of the CASS' Institute of Finance and Trade
Economics. "But figures show that in the second half of this year,
those measures have played a decreasing role," he said.
Fixed-asset investment will expand by 25.6 percent year- on-year
this year and about 24.2 percent next year, the book said.
The economy may become overheated if the trend continues, warned
Chen Jiagui, deputy head of CASS.
Grain and food prices are rising, and asset prices have been
driven up with ample liquidity and the negative real interest rate,
he said. "It is becoming harder to enforce macroeconomic
policies."
Chen said it would be best if economic growth could be kept at
about 9 percent next year, but economists forecast that it will be
around 11 percent based on the current trend, according to the
CASS.
The book suggests that the government slow down economic growth
next year through tightening measures. Apart from tightening
credit, the government can make use of the drive to save energy use
and cut pollutant emissions to improve the efficiency of economic
growth.
(China Daily December 5, 2007)
