China's economy to grow 9.5 percent in 2007 - report

Updated: 2006-11-13 19:38

BEIJING -- China's economy will continue to grow at around 9.5 percent in 2007, with fixed asset investment up 20 percent on 2006, according to the latest report from the State Information Center (SIC).

A clerk at a foreign currency exchange desk shows Chinese yuan banknotes in this July 22, 2005 file photo taken at a hotel in Shanghai, China. [AP]

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According to the SIC, a think tank under the National Development and Reform Commission, the three main engines driving Chinese economic growth -- exports, consumption and investment -- will all slow down a little.

Fixed asset investment is expected to hit 13.45 trillion yuan (1.68 trillion U.S. dollars) in 2007, up 20 percent, but 6.5 percentage points lower than the figure predicted for 2006.

China's fixed asset investment rose to 7.19 trillion yuan in the first nine months of this year, up 27.3 percent from the same period of 2005, according to the National Bureau of Statistics.

Meanwhile, the volume of retail sales will reach 8.59 trillion yuan in 2007, a nominal growth of 12.5 percent, but again 1.1 percentage points lower than the predicted whole-year growth rate for 2006.

Exports will jump 15 percent in 2007, which is 9.5 percentage points slower than in 2006. The trade surplus is expected to reach 177 billion U.S. dollars, 30 billion U.S. dollars more than in 2006.

To achieve a balance in international payments, the think tank suggested adjusting the tax system and speeding up the standardization of corporate income tax for domestic and overseas-funded companies.

It said that China could use its ample foreign reserves to buy in reserves of strategic resources like crude oil and major metal products when prices on the international market are low.

The SIC also suggested the government institute heavier taxes on fossil energy such as coal, oil and natural gas, in order to improve energy efficiency.

China should follow a slightly more stringent monetary policy in 2007, restricting newly increased loans to three trillion yuan, said the report.

Sizzling fixed asset investment needed to be curbed, but more work should also be done to regulate investment structure, and government should put more money into public service sectors like education, public sanitation, resource conservation and environmental protection.

China's 11th five-year plan (2006-2010) projects continued high economic growth based on higher domestic consumption.

According to the latest statistics, China's consumer price index, the key inflation indicator, rose by 1.4 percent year-on-year in October, 0.2 percentage points higher than a year ago.

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