China’s state researchers are forecasting the Chinese economy will grow by 10% next year despite the financial turmoil and slowdown, with its economic growth expected to pick up speed mainly in the latter half of 2009. Although President Hu Jintao has warned about upcoming challenges amidst the global crisis to maintain the nation’s development in the near term.
“Although a dim world economic situation has led to weak overseas demand, domestic consumption and investments, vast development potential decided the country’s economy will grow at a fast pace,” reported Xinhua quoting researcher Zhang Liqun, from the Development Research Center of the State Council – which is a national economic and social policy research and consulting institution directly under the country’s Cabinet.
Zhang said his remarks were based on the country’s huge domestic consumption, and investment potential; sufficient fund, technology, labor and social security, and the government’s gradually mature macro-economic control measures.
“Personal income continues to increase as millions of migrant workers flow into the city to get their lives improved. Enlarging demand for houses and autos will form huge and lasting consuming power,” the report cited Zhang.
“However, domestic enterprises need to accelerate their paces in upgrading business structure, in a bid to better cope with severe world economic situation,” he said.
China’s gross domestic product (GDP) increased 9.9% year-on-year over the period til September 2008, to reach 20.16 trillion yuan (US$2.96 trillion), 2.3% points lower than the corresponding period last year. The economy expanded 9% in the third quarter of this year, posting the slowest growth rate since 2003.
In November, China had announced a massive 4 billion yuan stimulus package to boost domestic consumption in the face of weakening global demand. The IMF and World Bank have revised China’s growth outlook in 2009 to 8.5% and 7.5% respectively.
In addition, Zhang expects the country’s consumer price index (CPI) to fall to 3% in 2009. China’s inflation index hit a 12-year high of 8.7% in February but has since been receding, and concerns over its economic growth have now taken precedence.
The Purchasing Managers’ Index (PMI) for China fell to 38.8% in November, down 5.8% points from October and hitting the lowest level since the index was initiated in 2005. A reading above 50% suggests expansion, while one below 50% signals a decelerating economy. China’s exports growth in October also slowed to 19.2% from 21.5% in the prior month.
Zhang said that “the government had taken a string of macro-management policies in an active manner and it would take some time for the effects to surface”, which was likely after spring 2009.
