China's economy is up against a triple threat of weakening
global growth, possible domestic overheating and the catastrophic
impact of recent severe weather.
It should still record high growth this year, according to
analysts and economic organizations.
China was fighting strong economic headwinds as soon as 2008
started. Overseas, there's little dispute that the world economy is
slowing as the impact of the U.S. sub-prime crisis ripples
throughout the world. Then there are volatile international
financial markets and spiraling energy and food prices.
Domestically, China was hit by the worst snowstorms in half a
century this winter, while it was fighting to prevent domestic
economic overheating and curb inflation. The weather caused at
least 111.1 billion yuan (15.43 billion U.S. dollars) in losses,
inflicting severe damage on farms and households, forests and the
power grid.
To make things worse, consumer prices surged. The consumer price
index (CPI) accelerated from 6.5 percent in December to 7.1 percent
in January, the fastest pace in more than 11 years, on ballooning
food prices.
Can China maintain steady growth this year? That is likely to be
a key topic at the country's annual national congress, to be held
next month, which is expected to work out measures to achieve
prosperity.
Here are some views on the outlook for 2008 by economists and
organizations in China and abroad.
On the positive side:
- Dominique Strauss-Kahn, the managing director of the
International Monetary Fund (IMF), said during his visit to China
last week that although there had been some impact from the
sub-prime crisis on China, the IMF still expected the economy to
expand by 10 percent this year.
- The World Bank lowered its 2008 economic growth forecast for
China from 10.8 percent to 9.6 percent earlier this month. It said
that the economy would decelerate this year but still maintain high
growth, since China seemed able to resist the negative impact of
weakening global growth.
- Li Pumin, the spokesman with the National Development and
Reform Commission, said that China had gotten stronger over the
past 30 years of opening up and its economic fundamentals were not
hampered by snowstorms in the southern region. He didn't give any
specific figures.
- Xie Fuzhan, head of the National Bureau of Statistics, said
that the United States and China were two major engines of the
world economy. The decelerating U.S. economy would no doubt have a
negative impact on the world economy. So the slowing in the Chinese
economy, which had been on the verge of overheating, would be what
Chinese decision makers had expected, he said.
- Fan Jianping, an economist with the State Information Center,
a government think tank, echoed Li, saying that there had been no
change in the fundamentals of the economy. He said that growth
could still hit around 10.5 percent for 2008. He added that the
impact of the weather would be transient and limited and could
hopefully help cool the economy.
On the negative side:
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- Wang Jian, a macro-economic analyst with the National Development
Reform Commission, said that China faced the risk of "stagflation",
a period of inflation combined with economic stagnation.
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- Ha Jiming, China International Capital Corp. Ltd. chief
economist, said that the economy would keep growing rapidly in the
next eight to 10 years but with fluctuations, which would be most
likely to occur in 2008 and 2009.
(Xinhua News Agency February 21, 2008)
