China's economy expected to grow 8-9 percent in 2005
China's economy is still on the fast track, and its growth is expected to reach between eight and nine percent in 2005, said a report published recently by the China Center for National Accounting and Economic Growth.
The report, the China Economic Growth Report for 2005, cited a number of factors to support the forecast including stronger market forces, the improvement of economic system and the benefitsbrought by China's entry into the World Trade Organization.
It also pointed to the fact that the country's macro-control policy to rein in the economy had been a success, easing unbalanced market supply and demand and inflation pressure.
In his annual government work report presented earlier this month to the National People's Congress, Chinese Premier Wen Jiabao set the target of China's economic growth in 2005 at eight percent.
"The target is reachable, and growth between eight and nine percent is normal," said Liu Wei, deputy director of the center and head of the Peking University Economics School.
Over past 26 years beginning from 1978 when China introduced the reform and opening up policy, China's economy grew about 9.3 percent per year on the average. And in 2003 and 2004, the GDP grew 9.3 percent and 9.5 percent, respectively.
"The standard deviation for China's economic growth is three percentage points, therefore, any growth within that range is normal," he said.
However, the report noted that compared with GDP growth, fixed investment in the country grew much faster in the past two years, resulting in unbalanced market supply and demand, especially in the sector of oil, electricity, coal and transportation.
In 2003 and 2004, China's fixed investment grew nearly 27 percent and 25.8 percent. "They rose out of the normal growth range of fixed investment in China which stands between 2.2 and 24percent," Liu said.
According to the report, when fixed investment in China exceeds23.5 percent, each percentage point of growth reduces consumption growth by 0.8 percentage point.
"The government's move to dampen enthusiasm in fixed investment has come in time," Liu said.
The report says macro control should continue in 2005, and thatthe government should step up efforts to promote consumption and create better conditions to further develop a foreign-oriented economy.
The report is the second annual analysis on China's economy published by the center, which was jointly established by the National Bureau of Statistics and Beijing University Economics School.