Chinese language - Central bank says economy to grow by 10 pct in '07

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BIZCHINA / Macro Economy

Central bank says economy to grow by 10 pct in '07

(Reuters)
Updated: 2007-03-30 08:38

China's central bank expects the economy to slow a little in 2007, but to
maintain double-digit growth for the fifth year in a row, according to a
report by its research division published on Friday.

An exchange store staff counts Chinese RMB banknotes in Hong Kong May 16,
2006. [Reuters]
The report, carried by the official China Securities Journal, forecast
that annual growth in gross domestic product would reach 10.0 percent
both in the first half and for the whole year, compared with 10.7 percent
in all of 2006.

It estimated that GDP growth would be 10.2 percent in the first quarter,
9.85 percent in the second, 9.8 percent in the third and 10.05 percent in
the fourth.

China has been seeking to rein in credit and investment in order to keep
the economy on an even keel. To that end, the central bank has raised
interest rates three times and increased banks' required reserves five
times since last April.

The department also said that consumer inflation would be around 2.3
percent both in the first half and the whole year, up from 1.5 percent in
all of 2006, but within the range the central bank has said it is
comfortable with -- up to 3 percent.

Annual price inflation would reach 2.35 percent in the first quarter,
2.25 percent in the second, 2.5 percent in the third and 1.9 percent in
the fourth, it forecast.

The research department said that both export growth and the trade
surplus would ease slightly from 2006, when the surplus jumped by 74
percent from a year earlier to $177.47 billion.

The surplus in the first two months of this year tripled from a year
earlier to $39.64 billion.

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But the bureau said that a slowdown would happen in part as China's
recent steps to cut or remove export tax rebates for some products
started to show their effects.

The bureau also maintained its forecast that overall fixed-asset
investment would grow by about 22 percent in 2007, slowing from the 24
percent pace seen last year.

It said retail sales would expand more quickly in 2007 than in 2006, when
they grew by 13.7 percent, but it did not give a specific forecast.

The report did not provide any forecasts on Chinese monetary policy, but
it said that the possibility that the U.S. Federal Reserve would raise
interest rates this year was small.

The bureau forecast that if the Fed did raise rates, it would do so in
the second half.

($1=7.74 yuan)

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