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Economy to grow 9.4% this year and 8.9% next
(China Daily)
Updated: 2004-10-10 22:10
China's economy is expected to grow 9.4 per cent this year and slow slightly
to 8.9 per cent next year, reported the Chinese Academy of Social Sciences at a
symposium on China's economic situation in Beijing yesterday.
Wang Tongsan, a senior economist with the academy, said the country's
economic growth this year should be higher than last year's 9.1 per cent, as the
economy has stepped into an upward development period.
"If there are no major breaking events internationally, or severe natural
disasters or other big domestic issues, the country's economy is capable of
maintaining a growth rate of more than 8 per cent next year, due to the
country's macro-control measures," he said.
China's economy grew a year-on-year 9.6 per cent during the second quarter of
this year, slowing from the 9.8 per cent growth in the first quarter, after the
government announced it had achieved initial results in its macro-control
measures to curb over-investment.
"The overall performance of the economy was good," Wang said.
However, some prominent problems in the economy have not been fundamentally
rooted out, he said.
Energy and transportation bottlenecks, possible rebound in fixed asset
investments and the fast decline in money supply and loans are still troubling,
he said.
Niu Li, a senior economist at the State Information Centre, said the
government should also be alert to a further price rise, as price pressure has
already become very large.
"While food prices remain at a high level, international oil prices are
rising rapidly," he said.
International oil prices rose as high as US$53 per barrel during the past
week.
"There are also signs that raw material prices may rebound," he said.
The price rise would have a certain negative impact on ordinary people's
lives, Niu said.
However, the National Development and Reform Commission said on Saturday
growth in the country's consumer prices would drop in the fourth quarter.
The consumer price index, policy makers' key inflation gauge, rose a
year-on-year 4 per cent during the first eight months of this year, earlier
figures indicate.
This means Chinese citizens have already suffered a negative interest rate,
according to Qi Jingmei, another economist with the centre.
"A negative interest rate would result in people's lower expectations for the
future," she said.
A negative interest rate also leads to a decline in bank deposits, she said.
"This will make their purchasing power drop."
"Some low-income families have even begun to worry whether their income can
meet the basic needs for food and clothing," Qi said.
"Their health could also become at risk, because they will buy the cheapest
products and not pay enough attention to the quality of food."
Qi added the impact of the price rise was greater in rural areas.
Although farmers' per capita cash income rose 16.1 per cent year-on-year
during the first half of 2004, retail sales in rural areas grew only 9.1 per
cent, 5.6 percentage points lower than urban areas.
The government should not neglect ordinary people's feelings and interests,
she said.
The government should manage to raise the renminbi interest rate to increase
people's confidence in the future.
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