Chinese economy to grow 11.2% in 4th quarter

Updated: 2007-11-13 09:53

The SIC report said consumption would remain buoyant in the fourth quarter, the result of rising incomes and strong economic growth.

It said inflation-adjusted retail sales for the whole year would grow 12.8 percent, 0.2 percentage points more than a year earlier.

Fixed-asset investment, which contributes more to economic growth than consumption, would continue to expand in the fourth quarter. However, the growth of such investment would decelerate as a result of stricter controls on investment, according to the report.

Macroeconomic control measures that were announced starting in the second and third quarters, including interest-rate hikes and higher reserve ratios for commercial banks, would help curb investment growth in the fourth quarter.

In the latest move, the central bank on Saturday raised the reserve requirement ratio for the ninth time this year, pushing the ratio to a ten-year high of 13.5 percent.

One-year benchmark interest rates have been raised five times so far this year, and investors expect more interest rate hikes.

The SIC forecast said fixed-asset investment would rise 25.5 percent  this year, up one percentage point from a year earlier.

China's exports, another powerful engine of economic growth, would grow 22.5 percent in the fourth quarter, compared with 28.9 percent a year earlier. Export growth would be slowed by the decelerating U.S. economy and reduced Chinese export tax rebates that took effect on July 1, it said.

The report estimated the 2007 trade surplus at US$273 billion, up almost US$100 billion from the 2006 figure of US$177.47 billion.

The think tank said the government should continue to curb energy use through tax and price measures, and it also urged the government to hasten price reform for petroleum products and electricity.

It also advised the government to tighten fiscal discipline in the fourth quarter to help cool the economy.

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