State think tank forecasts '03 GDP growth at 8.3%
( 2003-09-25 14:48) (Dow Jones)
China's economy is expected to grow at a brisk pace this year despite the
outbreak of SARS and the war in Iraq, according to the forecast of the State
Information Center.
The State Information Center, a think tank under the National Development and
Reform Commission, said in a report Thursday that it expects gross domestic
product to grow around 8.3% this year.
GDP expanded by 8% in 2002. China's economy has "successfully overcome the
outbreak of SARS and the war in Iraq" and has maintained its fast-paced growth,
the State Information Center said in the report, which was published in the
China Securities Journal.
In the report, there were three growth scenarios for next year and three GDP
growth rates - 8%, 8.5%, and 9% - and the think tank concluded that a "suitable"
growth rate for 2004 would be around 8.5%.
Also, the center expects fixed asset investment to grow 20% this year and M2
growth to come in at 19.5% at the year-end.
The center forecast retail sales to rise 8.6% this year, compared with an
8.8% rise last year. It attributed the slight slowing in growth to the SARS
outbreak.
Imports would increase by 36.5% this year, a jump from last
year's increase of 21.2%, while exports would rise 27.4% this year, compared
with 22.3% last year.
The rise in imports, which consist largely of raw material and machinery,
would mean a sharp decrease in the trade surplus this year to an estimated
US$11.8 billion from US$30.35 billion last year, the center said.
The
think tank said there was little danger of inflation, as consumption, which
accounts for about 60% of China's GDP, was increasing at a gradual pace, adding
that overall investment wasn't yet excessive.
However, it warned that
some "unreasonable" investments were starting to take place, led mainly by local
governments. In the first seven months, fixed asset investment by the central
government fell by 8.9% on year, while investments by local governments rose by
41.6%.
"As a 'tacit rule,' GDP growth is actually used as a way to
evaluate local government officials, and that motivates unreasonable
investments," said the think tank, adding that if such investments continue it
would result in " overheating."
It said local governments were often the
ones adding to the risk of overheating in the automobile and steel sectors.
On next year's economic growth, the center said it thought 8.5% would be
a suitable increase, as such a rate would help prolong the expansion period of
China's economy. At that pace, the main driver for the economy would be a rise
in domestic demand and "international resources," rather than a major shift in
macro economic policy.
It also suggested that at that growth rate the
government should issue about 100 billion yuan (US$1=CNY8.28) worth of
construction bonds, and target an increase in broad M2 money supply of about 17%
next year. Fixed asset investments growth would be about 16%, and retail sales
would grow at a rate of about 9.8% in 2004.
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