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Nation's GDP to expand 8% to 9% in 2006
(AFP)
Updated: 2005-12-23 10:07 BEIJING (AFP) - A top China economist has said he
expects growth of between eight to nine percent next year, only days after it
was found that the economy's value had been understated by 284 billion dollars.
According to Yao Jingyuan, chief economist at the National Bureau of
Statistics, the economy is expected to slow fractionally in 2006 from the 9.4
percent annualised rate recorded in the first nine months of the year.
Investment and net exports, the main drivers of recent growth, would still
spur on the economy and the government was also expected to stimulate domestic
consumption, said Yao Thursday.
On Tuesday the statistics office said the total value of the economy at
end-2004 was in reality 16.8 percent or 284 billion dollars more than previously
estimated.
The miscalculation, mainly in the service sector, meant China hopped over
Italy to become the world's sixth largest economy with more than 1.97 trillion
dollars in gross domestic product.
China, however, is growing much faster than Europe and many believe the
world's most populous country has already overtaken Britain as the world's
fourth largest economy, which last year registered GDP of about 2.14 trillion
dollars.
Most analysts expect the mainland economy to slow a little next year. But
economist have long held that over the past few years China has in reality been
expanding at around 11 to 13 percent, which would be in line with the latest
revision.
The government has said it plans to increase domestic demand in the coming
five years and reduce the economy's reliance on investment and trade in a bid to
rebalance the growth model.
But this will not happen overnight and investment -- particularly that driven
by local governments -- will continue to play a pivotal role in driving growth.
"China's consumption will play an increasingly important role next year," Yao
told a financial forum in the Chinese capital.
"However, it's unlikely that consumption-boosting measures will work
overnight so investment will continue to be the largest engine for growth next
year," he said.
Yao said Beijing's burgeoning trade surplus, which according to Chinese
calculation methods is expected to hit 100 billion dollars in 2005, would place
upward pressure on the yuan.
China's major trading partners the European Union, the US and Japan view the
yuan as sharply undervalued and say that gives mainland exports a competitive
price advantage.
Although China in July revalued the yuan by 2.1 percent, releasing it from a
decade-long peg of 8.28 to the dollar, the currency has since traded in a narrow
band of around 8.0.
Trading partners and especially Washington, which sees its trade deficit with
Beijing at a record 200 billion dollars, want to see greater flexibility in the
currency sooner rather than later.
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