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:
- 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.
- 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)
