Economists: China economy not overheating

13:34, April 08, 2010      

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Economists in Beijing recently predicted that China's GDP growth rate may exceed 11 percent in the first quarter. However, this is not a sign that China's economy is overheating, they say, because economic growth may slow down in the second half of 2010.

Zhang Liqun, a researcher with the State Council Development Research Center, said that double digit GDP growth in the first quarter was not unexpected.

As economic growth during the same time last year was relatively low, we cannot say that China's economy is overheating based on the high year-on-year growth in the first quarter of 2010, he said.

"The high growth rate may be unsustainable," Zhang said.

Financing institutions and mainstream economists expect that China's GDP may grow over 11 percent in the first quarter of 2010. High growth rate has sparked market concerns.

A report released by the State Information Center warned that M1 growth rate, new yuan-dominated loans growth rate, electricity generated, industrial added value and retail sales growth are showing signs of overheating.

Ha Jiming, chief economist of CICC, predicted that GDP growth rate in the first quarter will hit 11.5 percent, while Fan Jianping, an official with the State Information Center, gave a prediction of as high as 12 percent.

The World Bank's newest prediction showed that China's economy may growth by 9 percent in 2010. However, experts also pointed out that China's economic growth won't be overheating due to relatively low figures last year and existing uncertainties.

Economic growth, including the growth rate of China's industry, may slow down starting from the second quarter, said Fan.

"There are still considerable uncertainties in export and market-dominated investment. It is hard to say that China's economy is already overheating," Zhang said. "The economic growth rate may be lower after the second quarter."

Based on the impact of low figures from last year, economic indexes are only at the "normal growth" level, said the State Information Center's report.

A report by the CICC also pointed out that China's economy is still recovering stably, and there are no signs of obvious overheating. The report read: "The market is over-concerned with policies."

"The growth rate of consumer prices is expanding, but the main reason was the low figures of the previous year. Judging from monthly data, both CPI and PPI are recovering due to seasonal reasons, and there are no signs of acceleration," according to the report.

By People's Daily Online


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