China's economy won't revert after the Beijing Olympics but will continue to develop even without the Games boost, according to renowned economist Fan Gang.
"I used to worry about China's post-Olympics economy. But the situation is very different now from five or six months ago, you can see the stock market and property market are going through corrections, and the government has raised the price of energy - they relieved the risks accumulated during the fast expansion of the economy," said Fan, director of the National Economics Research Institute and a central bank adviser.
"Personally, I think such corrections are good things for China to realize a soft landing," Fan said, according to Xinmin Weekly.
He also predicted the corrections of the stock market and property market would not deteriorate after the Olympics.
Fan said the government should not intervene in the corrections of stock and property markets because it would set up a dangerous position if the economic bubble suddenly burst.
The benchmark Shanghai Composite Index has been more than halved from the record height reached in October last year to below 3,000 points.
The sluggish sales of homes and the central bank's tightened control on credit have forced some property developers to cut the red-hot prices of real estate in some markets.
Fan said China's economy also would not go backwards after the Olympics because the investment in Beijing only accounted for 2.9 percent of the national total while the figure for Shanghai stayed at 5 percent.
"The loss of 3 percent is no big deal. But it's not just the Olympics or the World Expo. Beijing and Shanghai also need construction because they are in the early stages of urbanization," Fan added.
Fan said the rise of energy prices may add pressure to the control of near-term inflation. But an early adjustment is better than a late one and the price rise of energy occurred after food cost hikes were brought under preliminary control, he said.
China's Consumer Price Index has eased to 7.1 percent in June from 7.7 percent in May and 8.5 percent in April. Some economists expect the main gauge of inflation will fall to 6.7 percent in July.
(Shanghai Daily August 1, 2008)
