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September 29, 2010

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Home » Business » Economy

China growth forecast to stay

THE Asian Development Bank kept its forecast for China's economy to grow 9.6 percent this year despite some signs of moderation recently.

In the Asian Development Outlook 2010 Update released yesterday, the Manila-based bank said China's pace of growth may soften to 9.1 percent next year, taking into account the phasing out of the stimulus policies.

"A V-shaped economic recovery in 2009 was underpinned by very expansionary fiscal and monetary policies," the report said. "Strong investment and, to a lesser extent, growth in consumption largely offset the impact of shrinking external demand. Allowing for some adjustment, expansionary policies will continue this year. Coupled with a stronger global economy, China's gross domestic product growth is forecast to accelerate."

China's economy expanded 11.1 percent in the first half of the year, with the pace easing to 10.3 percent in the second quarter from 11.9 percent in the first three months.

There were more signs of economic easing in recent months, with growth slowing in industrial output and investment, and private consumption yet to see a major boost.

The ADB also predicted China's consumer prices, a main gauge of inflation, may rise 3.6 percent from a year earlier this year, higher than the government's target of containing it within 3 percent, due to rising costs of oil and commodities.

"But the upward pressure on prices will be offset to some extent by the expected firmer stance in monetary policy," the report said. It predicted consumer prices to rise by a slower pace of 3.2 percent in 2011.

It suggested China expand services to boost the domestic engine of growth, generate new jobs and raise living standards.

But China should liberalize market concentration and entry barriers, remove curbs on direct foreign participation in some areas of banking and improve inefficient allocation of capital, the ADB said.




 

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