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Lower GDP growth rate forecast

[ 2011-11-23 10:42]     字号 [] [] []  
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The World Bank has lowered its GDP growth rate forecast for China to 9.1 percent for this year and 8.4 percent for 2012, amid growing concerns about impact of the European debt crisis on the world's second-largest economy.

But analysts said the downturn may not necessarily mean an instant easing in the country's monetary policies.

The bank revised down its previous projections of 9.3 percent for this year and 8.7 percent for next year because of weakening external demand, the government's measures to cool the property sector and the tightening credit policies, according to Ardo Hansson, lead economist for China at the World Bank.

"Instead of taming inflation, preventing a rapid decline in the economy will turn out to be the central government's primary task in the coming months," said Li Yang, vice-president of the Chinese Academy of Social Sciences and a former adviser to the central bank.

China's consumer price index (CPI), a key gauge of inflation, rose 5.5 percent year-on-year last month, a further decline from 6.1 percent in September, after surging to a 37-month high of 6.5percent in July.

The World Bank estimated that China's inflationary pressure will ease further next year, predicting that CPI will grow 5.3 percent this year and 4.1 percent next.

Meanwhile, "the downward trend in China's economic growth rate has begun, and the authorities should take measures to prepare for an even worse scenario", Li said.

However, those measures would not include China loosening its monetary policy now, economists said.

Hansson warned China to be more cautious about monetary loosening, because the CPI just softened for two months and the forecast of 9.1 percent growth is still above the government's GDP target this year.

Xia Bin, one of the 15 members of the central bank's monetary policy committee, said China will not loosen monetary policy but should take measures to increase domestic demand as the country faces a poor environment for its exports next year because of weak demand from the US and Europe.

Analysts are now worrying about a possible trade deficit for China next year if weakening external demand because of the European debt crisis continues or even worsens.

"To increase domestic demand, fiscal policy must be very proactive, reform of the tax system should be speeded up and wages raised to stimulate consumption," Li said.

Li suggested that in the last two months of this year, the nation could encourage faster growth of new loans from commercial banks to shore up fixed-asset investments and avoid a hard landing.

(中国日报网英语点津 Helen 编辑)

Lower GDP growth rate forecast

About the broadcaster:

Lower GDP growth rate forecast

Emily Cheng is an editor at China Daily. She was born in Sydney, Australia and graduated from the University of Sydney with a degree in Media, English Literature and Politics. She has worked in the media industry since starting university and this is the third time she has settled abroad - she interned with a magazine in Hong Kong 2007 and studied at the University of Leeds in 2009.