Central bank: Economy to grow 9.8% in 2007

Updated: 2006-12-22 15:25

China's sizzling economy will slow slightly next year but still should grow by a robust 9.8 percent even as Beijing extends controls to cool off an investment boom, the People's Bank of China said in a report published Friday.

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The forecast was in line with outside estimates but well above the 8 percent target for 2007 set by a government strategy report released this month. It would be by far the highest growth rate for any of the world's major economies.

Growth this year should be 10.5 percent, said the central bank report, which was carried on the Web site of the official China Securities Journal newspaper. That was in line with earlier official forecasts.

Chinese leaders want rapid growth to reduce poverty. But they are trying to stop an investment boom in real estate and other industries where they worry that overspending on unneeded factories and other assets could ignite inflation or a debt crisis.

Beijing has raised interest rates twice this year, tightened controls on credit and imposed curbs on new construction.

Despite the controls, the government says investment in factories and other fixed assets in the first 11 months of this year soared by 26.6 percent over the same period last year.

In comments to state media, Ma Kai, chairman of China's main planning agency, the National Development and Reform Commission, said this month that the "relentless expansion has yet to be stopped."

Ma said in an interview Friday on the Web site of the People's Daily that economic controls will be extended into next year to prevent runaway investment.

Inflation should be 1.4 percent this year and 2 percent in 2007, the central bank report said.
The government reported economic growth of 10.7 percent for the first nine months of the year. But official indicators show the expansion has slowed slightly since then.

The planning report, released this month following a meeting led by President Hu Jintao, said Beijing would focus next year on trying to shift the basis of China's economic growth from investment and exports to domestic consumption.

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