China's economy is expected to increase by roughly 8 per cent on the back of strong investment growth, Chinese and foreign economists said yesterday at a press conference in Beijing.
Fan Jianping, a senior economist with the State Information Centre's forecasting department, said the gross domestic product (GDP) will grow at 8 per cent or a bit higher than that. Economic growth in 2004 is likely to be more rapid than that in 2003, he said.
"The economy is in a new expansionary cycle,'' Fan said.
World Bank China Programme chief economist Deepak Bhattasali put his 2003 forecast figure in the range between 7.8 per cent and 8 per cent for the nation's growth.
Fan and Bhattasali agreed that strong investment growth spurred by surging demands for homes and cars were major forces driving the Chinese economy.
Chinese consumer spending on housing soared by 44 per cent in the first seven months over the same period of last year. Automobile sales skyrocketed by 77 per cent.
The demand for houses and cars stimulated demand for upstream products like construction materials and steel, as well as downstream products like decoration materials and home appliances.
As a result, fixed asset investment jumped by 33 per cent during the January-July period.
Fan said investments were spearheaded by enterprises, many of which are private firms, instead of by the governments at various levels as has been the case in the previous years.
But Fan said he did not think the investment growth was overheated.
"They are based on real demand,'' he noted. "The stream of investment is healthy.''
China's current economic growth potential in between 8 and 9 per cent.
"If we subtract the influences of the government investments of the previous years, we are still below that (the potential rate), so the chances for a run-away economy are small,'' Fan said.
However, he said the government is still vigilant about possible overheating in certain sectors. The central bank recently hiked required deposits by commercial banks to correct the excessive growth of money supplies.
Fan said he is optimistic about economic prospects for 2004 because he believed investments and consumption will continue to be strong. In addition, foreign direct investment growth will also remain robust, he said.
Yesterday's conference was for the World Bank's presentation of its 2004 Global Economic Prospects report. The bank predicted the global economy would grow by 2 per cent in 2003 and 3 per cent in 2004.
(China Daily September 6, 2003)
