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.
(China Daily) |