Economic restructuring may be hindered if GDP grew faster than 9%: political advisor

Current economic situation involves no risks of hitting the bottom for a second time. China's GDP growth rate will be around 9 percent in 2010, said Li Yining, a political advisor and well-known economist March 3. "China's economic restructuring may be hindered if the GDP growth rate exceeds 9 percent.

He pointed out that if economic growth is too fast, it is possible that enterprises will pay too much attention to short-term interest rather than industrial upgrade. Meanwhile, inflation risks will rise if GDP growth rate is higher than 9 percent.

China should focus on economic restructuring, iterated Li. "China recovered from the global financial crisis in 2009 and completed the task of guaranteeing an 8-percent growth. GDP growth between 8 and 9 percent will be an easy task for China in 2010."

Li also warned of inflation risks. "Judging from history, China's CPI growth has always stayed above 4 percent if GDP growth was higher than 9 percent."

Inflation has not emerged in China yet, but we should keep cautious, said Li.

As for credit expansion, Li pointed out that new bank loans grew too fast in 2009. "The central government emphasized a moderately loose monetary policy, but in fact it was 'loose'. The aim of current macro-control is to re-establish the 'moderately loose' policy."

By People's Daily Online