World Bank Sees Nine Percent Growth In China This Year

SINO DAILY

China is a superpower very much in command of its economy.

Beijing (AFP) Aug 16, 2005
China's economic growth will soften to nine percent this year and about eight percent in 2006 due to slowing world trade and the modest revaluation of its currency, the World Bank forecast Tuesday.

"We now project GDP growth of nine percent in 2005, and about eight percent in 2006," the bank said in its quarterly update on China's economy.

China's central bank last month also forecast full-year GDP growth of nine percent compared with 9.5 percent last year.

The World Bank said the economic outlook for China remains good in a stable macro-economic environment with favourable financial conditions.

The bank based its projection partly on global economic factors, saying the growth in world economic activity and trade is projected to slow from 12 percent in 2004 to 6.4 percent in 2005. This would hit China's export growth.

Exports would also be affected somewhat by the modest revaluation of the yuan and recent measures to discourage exports of highly energy-intensive products, the bank said.

Among other measures, exporters of aluminium and steel can no longer claim rebates of value-added tax.

Domestic investment growth and price pressures are also expected to ease, the World Bank said.

Continued rapid productivity increases in China's manufacturing industry put downward pressure on prices, the report said, adding that the revaluation would help ease imported inflation.

The bank called on macro-economic policymakers to shift away from "the relatively volatile" export- and investment-based growth to more stable consumption-based growth.

"Measures in social security and shifting government spending away from investment towards health, education and social safety could help increase consumption's share in GDP, policies that would also help in redressing the surpluses on the current account," the report said.

To maintain growth and job creation as consumption increases, however, more efficient investment and a shift of investment to services is needed, it said.

"Financial sector reforms, better corporate governance, and a dividend policy for state enterprises could be measures towards that goal," the bank said.

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SINO DAILY

Merger Of Two Chinese Steel Companies To Make Global Giant

Shanghai (AFP) Aug 15, 2005
China's second and fifth largest steel mills announced Monday an ambitious merger that would form a global giant and make it one of the world's top players.

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