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CASS predicts 2012 GDP to rise by 8.7 percent

By Wang Jiamei (Global Times)

08:08, April 26, 2012

China's gross domestic product (GDP) and consumer price index (CPI) are expected to rise by 8.7 percent and 3.5 percent respectively this year, according to a forecast by the Chinese Academy of Social Sciences (CASS) in its spring report on the country's economic outlook released yesterday.

Both the GDP and CPI growth figures in the latest report are lower than the previous predictions from the CASS of 8.9 percent and 4.6 percent respectively for 2012.

The CASS usually makes projections of various economic indicators for the country in its spring and autumn reports each year.

The report states that China's macro economy is likely to see moderate growth in 2012, accompanied by continuous improvement of people's livelihood and slowing growth of commodity prices.

China's GDP grew at 8.1 percent year-on-year in the first quarter, down from 8.9 percent in the previous quarter. The country had already slashed its 2012 GDP growth target to an eight-year low of 7.5 percent and set the CPI target at around 4 percent, according to the government work report issued last month.

"The CASS's GDP forecast for 2012 is quite reasonable and is in accordance with the economic situation during the first few months of this year," Chen Feixiang, professor of economics at Shanghai Jiao Tong University, told the Global Times yesterday.

The report also said that while the authorities should adhere unswervingly to the existing controls on the housing market, the central government should be alert to financial risks deriving from the real estate sector.

Banking credit risk could escalate and spread in the financial market if a sharp price drop in the property market caused any break in the industry's capital chain.

Outstanding loans for property development totaled 2.83 trillion yuan ($448.86 billion) as of the end of March, a rise of 11 percent year-on-year but a drop of 6.1 percentage points compared with the end of last year, according to data released by the central bank yesterday.

"In my opinion, the Chinese real estate market won't see any substantial decline this year, because local governments still hope for further growth in the sector, despite the central government's efforts to curb housing prices," Chen said.

"Also, there have been no effective measures to crack down on speculation activities so far, so speculative investors won't leave the market."


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