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Red-hot China set to cool a touch in 2006
Updated: 2006-01-18 07:31

China's tax chief said on Tuesday the economy had grown by 9.8 percent in 2005, but comments by a senior commerce ministry official and analysts suggested the pace of expansion could slow this year, if only slightly.

Xie Xuren, commissioner of the State Administration of Taxation, gave the same GDP growth figure as Ou Xinqian, a vice minister responsible for the National Development and Reform Commission, China's main economic planning agency, on January 1.

That would make 2005 the third consecutive year in which China's economy had grown by around 10 percent. The economy expanded by 10.1 percent in 2004 and 10.0 percent in 2003.

But Vice Minister of Commerce Yi Xiaozhun said exports, a key driver of growth, could come under pressure this year because of frictions with China's trade partners over the value of the yuan.

Exporters have had to lower their expectations on expanding overseas markets due to increasing pressure for the currency to appreciate, the Shanghai-based China Business News quoted Yi as saying.

"That means we will not see a relaxed year for 2006," Yi said. "A key task for 2006 will be creating a fair trade environment and increasing imports appropriately so we can maintain coordinated development of both exports and imports."

GDP growth will probably slow in 2006 because of a drop in the trade surplus, Jonathan Anderson, chief Asia-Pacific economist at UBS, told a conference in Shanghai.

But Anderson said he expected a soft landing for the economy, as the environment for domestic industry improves. He sees GDP growth this year of 9.1 percent after 10.7 percent in 2005.

"A recovery in construction and infrastructure spending, together with continued buoyant consumption and export momentum point to a better domestic demand outlook for 2006," he said.

Strong consumption would help sustain GDP growth of 8 percent to 8.5 percent for the next five to 10 years, he added.
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