China's gross domestic product (GDP) is expected to drop to 8.4 percent this year from last year's 9.1 percent, but the country remains an engine for East Asia and even for global growth, according to a forecast report released by United Nations Development Programme (UNDP) on Friday in Beijing.
The report also made an optimistic forecast of 8.9 percent and a worst-case 7 percent. UN economists said China's economy might slow to 7 percent if the global credit crisis continued to linger, the recession in Europe and the United States deepened and fiscal responses delayed.
The government set the goal of 8 percent growth this year at the Central Economic Work Conference held on Dec. 8.
The report said China contributed to about 22 percent of the global growth in 2008, and would likely to contribute a higher proportion this year, as most developed economies had been draggedin to recession.
East Asia would experience a continuing economic deceleration with the region's 2009 GDP growth expected to fall to 6 percent from 6.9 percent in 2008 due to weakening trade with Europe and the United States, according to report.
Growth of the world economy was expected to fall to 1 percent from 2.5 percent in 2008.
The report forecast the U.S. economy would decline 1 percent and Europe 0.7 percent this year, compared with 2008 growth of 1.2percent and 1.1 percent respectively.
UN economists said the global decline would have been bigger without the continued strong growth in China's domestic final demand.
However, China's slowing foreign trade curtailed its previously robust economic growth. The country's GDP growth rate for 2007 was revised to 13 percent from 11.9 percent on Wednesday.
The General Administration of Customs reported Tuesday that China's exports and imports declined for a second consecutive month in December, reflecting weakening external and domestic demand.
Exports fell 2.8 percent from a year earlier to 111.16 billion U.S. dollars, while imports fell 21.3 percent to 72.18 billion U.S. dollars.
Zhu Baoliang, vice director of the State Information Center said, "The 9.1 percent in 2008 is still impressive growth, and China remains the powerhouse for the world economy."
Wang Tongsan, director of the Institute of Quantitative and Technical Economics of the Chinese Academy of Social Sciences, was confident that the country would achieve the goal of 8 percent growth.
He said China had rushed out a series of plans to sustain the economy and was considering more measures to take effect in the second half.
China launched a fiscal stimulus package of 4 trillion yuan (586 billion U.S. dollars) to boost domestic demand in both infrastructure investment and consumption during 2009 and 2010.
The central bank had cut interest rates five times and reduced the deposit reserve ratio four times since September 2008 to sustain economy.
Plans to boost automobile and steel sectors, the "pillar industries", were rolled out on Wednesday, and more specific measures for manufacturing and the oil refining industry are expected.
The report said with 1.9 trillion U.S. dollars in foreign exchange reserves and balanced books, China had enough policy space to adopt more expansionary fiscal policy necessary for stimulating domestic demand, to offset the severe drop in exports.