China's economy is likely to grow at a slower pace next year if
the government's tighter monetary policies take effect, the Asian
Development Bank said yesterday in a report.
"Economic growth in the People's Republic of China, the region's
growth engine, will slow to 10.5 percent in 2008 from 11.4 percent
in 2007 if government measures to cool the economy begin to take
hold," the ADB said in its December issue of Asia Economic
Monitor.
So far this year, the central bank has raised its benchmark rate
five times and the reserve requirement ratio 10 times in its
efforts to contain an increasingly overheating economy and surging
stock markets.
"But given that the investment surge continues unabated and the
stock indexes continue to rise, a further monetary tightening is
widely expected before the end of the year," said the report.
China's growth in the first three quarters hit a record 11.5
percent and is projected to sustain double-digit levels for the
remainder of this year and next, although the pace is likely to
moderate to 10.5 percent in 2008.
Several measures have been introduced to curb rapid investment
growth and asset-price inflation since mid-2006, but the full
effect has yet to be seen.
"Surging food prices have driven headline inflation in recent
months. The underlying factor, however, is ample liquidity in the
economy as a result of persistently large capital inflows and
strong growth in money supply in recent years," said the
report.
Meanwhile, emerging East Asia will also see its growth ease to
eight percent in 2008 from 8.5 percent this year as expansion in
key industrialized nations moderates amid volatility in financial
markets and rising oil prices, said the report.
The region's economic outlook is subject to greater downside
risks now than just a few months ago - including a possible US
recession, tightening of global credit, fluctuating exchange rates,
and oil and commodity price rises.
(Shanghai Daily December 14, 2007)
