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8% growth target can be met, SIC says

CHINA'S economy may be able to fulfill the 8 percent growth target this year, but the country has to improve the quality of its investments to sustain development, the State Information Center said today.

The research unit under the National Development and Reform Commission, China's top economic planner, estimated gross domestic product to expand 8 percent this year from a year earlier, with the agricultural sector gaining 3.5 percent, manufacturing 8.5 percent and services 8.6 percent.

"The pace of China's economic growth will accelerate quarter after quarter this year, due to buoyant domestic demand while export declines may moderate in the second half," the center said in a report.

China's GDP expanded 7.1 percent in the first half on an annual basis. It advanced 7.9 percent in the second quarter - the first pick-up following seven quarters of declines - after hitting a 17-year low of 6.1 percent in the first three months.

However, the center said investment quality could become a source of concern for the country to sustain development.

It said the effect coefficient of investment, an index to measure the effectiveness of investment, hit a 13-year low of 0.1 in the first half, after some investments were spent on unnecessary projects or flew into stock and property markets.

In sharp contrast, the amount of investment jumped nearly 39 percent in the first half, the most since 1997.

"The country may have to face excessive capacity and growing inventory in the near future if it does not take action to control the quality of investment," the report said.

It suggested that the country should not carry out more stimulus measures before the current stimulus is fully implemented and the efforts should be made to channel the fund to those who can make good use of the money.


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