September 06, 2008

Chinese economy and inflation to grow at slower pace in 2008

According to Mr Yao Jingyuan, the chief economist of the National Bureau of Statistics China's economy is likely to expand at a slower rate in 2008 than it did in 2007 by less than 11% as the government tries to avoid overheating.

According to the NBS figures

1. Chinese GDP rose by 11.5% YoY in the first three quarters of 2007 despite a series of tightening measures. Gross domestic product is forecast to grow by 11.5% in 2007

2. The consumer price index, a major gauge of inflation, jumped by an 11 year high of 6.9% in November and 4.6% in the first 11 months, primarily driven by surging food prices is likely to climb 4.7% in 2007

3. The surplus hit 238.1 billion US dollars from January to November 2007, higher than the 177.5 billion US dollars recorded in 2006. Trade surplus would reach 260 billion US dollars in 2007.

Mr Yao told a forum in Beijing that inflationary pressure is expected to ease next year. Yao said that the government should utilize more coordinated measures to prevent structural price rises from feeding into the inflation figures. He added that “China can use faster appreciation of its currency to curb inflation, which is also lifted by the declining US dollar and higher global commodities prices.”