Learn Chinese - GDP forecasts revised after strong start

BIZCHINA / Top Biz News

GDP forecasts revised after strong start

By Zhu Qiwen (China Daily)
Updated: 2007-04-02 08:48

Construction workers toil on the roof of a new building being erected in
Beijing April 1, 2007. [Reuters]

Stronger-than-expected economic figures have prompted a number of
international economic research institutions to revise upwards their
forecasts for China's gross domestic product (GDP) growth.

Almost all the major economic indexes in the first two months of this
year have exceeded those for the same period last year.

"The country's GDP growth in the first quarter will be faster than in the
equivalent period last year and also that of the previous quarter," Chen
Dongqi, deputy director of the Institute of Economic Research of the
National Development and Reform Commission, said.

Related readings:
ADB: China economy to slow moderately
Full Text: China's economic and social development plan
Increased productivity key to economic future
Shanghai ranks most competitive provincial economy in China
Central bank says economy to grow by 10 pct in '07
China's economy growth to keep 10% in 2007: ADB
Green GDP shown the red signal
Open coastal cities report strong economic performance
China to move away from energy-intensive growth
Pattern of growth 'has to change'
Wen confident in maintaining economic growth
Local governments set higher GDP targets

The State Information Center has adjusted its GDP growth forecast for the
first quarter from 10.2 percent to about 11 percent.

Despite the government last year adopting a number of tightening
measures, economic growth has shown clear signs of rebounding in the past
quarter.

Statistics show that urban fixed-asset investment picked up moderately to
23.4 percent year-on-year in January-February, and from about 20 percent
in the fourth quarter of last year, reversing the trend of a gradual
slowdown since last July.

Meanwhile, the trade surplus registered a massive leap of 230 percent,
and retail sales were up 14.7 percent on the first two months of last
year.

"Industrial growth is a key driving force behind overall economic growth,
and power generation is also a useful indicator," Chen said.

According to the National Bureau of Statistics, China's industrial output
rose 18.5 percent year-on-year while industrial profits soared 43.8
percent in the first two months.

Growth in power generation also accelerated to 16.6 percent year-on-year
from less than 14 percent in the same period last year.

Despite expectations the government will introduce another round of
tightening measures soon, global investment bank, Lehman Brothers, still
revised up its forecast for the Chinese economy.

According to a recent report by the firm, the first quarter growth
forecast has been raised from 9.8 percent to 10.1 percent, and the annual
growth rate from 9.6 percent to 9.8 percent.

"In the light of the stronger-than-expected figures in the first two
months of this year and the likely policy responses, we have lifted our
full-year growth projections for this year to 10 percent from 9.1
percent, based mainly on stronger growth in credit, investment and
exports," Qu Hongbin, the chief China economist with HSBC, said.

Domestic banks extended new loans of 982 billion yuan ($127 billion) in
the first two months of this year compared with 716 billion yuan ($92
billion) in the same period of 2006.

The government forecast early last month that the country's GDP is to
grow by about 8 percent this year.

The country has just witnessed four consecutive years of double-digit
growth, including 10.7 percent GDP growth last year, the fastest in a
decade.

The latest official forecast reflects the authorities' determination to
shift the focus of economic growth from quantity to quality.

(For more biz stories, please visit Industry Updates)

Learn Chinese