Development bank has faith in Chinese economy
By Wang Yanlin |
April 14, 2010, Wednesday
|
Print Edition
Print Edition
CONTINUED fiscal and monetary stimulus measures would propel growth in China to 9.6 percent this year, the Asian Development Bank said yesterday.
It forecast that this would ease to 9.1 percent in 2011 as the government tightened expansionary policies.
The projection by the Manila-based bank provided more evidence of the international communities' confidence in China's economy.
It was slightly higher than the prediction by the World Bank, which last month forecast an annualized growth of 9.5 percent for the Chinese economy this year.
The fiscal and monetary stimulus measures to combat the effects of the global crisis helped the economy to post a V-shaped recovery in 2009.
This rebound is set to continue in 2010 on the back of the government's 4-trillion-yuan (US$586-billion) two-year injection, according to Asian Development Outlook 2010, the bank's flagship annual economic publication released yesterday.
At the same time, it said signs of rising inflation, higher asset prices and returning foreign capital flow would probably see the government adopt a more cautious approach.
China had begun to tighten monetary policy and this was likely to continue into 2011, the report said.
"The global recession and expected modest recovery in industrial countries have reduced the potential for exports to be a major driver of growth," said Jong-Wha Lee, chief economist at ADB.
"And while fiscal and monetary stimulus measures have acted as a substitution in the short term, sustaining growth in the longer term will require robust private demand."
The report said some obstacles stood in the way of greater private consumption, such as restrictions on labor mobility and households' declining share of total income.
"As recovery becomes stronger, authorities need to watch out for rising inflation pressures in consumer and asset prices and implement regulatory intervention as needed," Lee said.
The bank predicted the consumer price index, the main gauge of inflation, would grow 3.6 percent from a year earlier and 3.2 percent in 2011.
The report said China may tolerate a slight appreciation of the yuan this year and into 2011, against the backdrop of sustained economic growth, increased inflation and a rising current account surplus.
It forecast that this would ease to 9.1 percent in 2011 as the government tightened expansionary policies.
The projection by the Manila-based bank provided more evidence of the international communities' confidence in China's economy.
It was slightly higher than the prediction by the World Bank, which last month forecast an annualized growth of 9.5 percent for the Chinese economy this year.
The fiscal and monetary stimulus measures to combat the effects of the global crisis helped the economy to post a V-shaped recovery in 2009.
This rebound is set to continue in 2010 on the back of the government's 4-trillion-yuan (US$586-billion) two-year injection, according to Asian Development Outlook 2010, the bank's flagship annual economic publication released yesterday.
At the same time, it said signs of rising inflation, higher asset prices and returning foreign capital flow would probably see the government adopt a more cautious approach.
China had begun to tighten monetary policy and this was likely to continue into 2011, the report said.
"The global recession and expected modest recovery in industrial countries have reduced the potential for exports to be a major driver of growth," said Jong-Wha Lee, chief economist at ADB.
"And while fiscal and monetary stimulus measures have acted as a substitution in the short term, sustaining growth in the longer term will require robust private demand."
The report said some obstacles stood in the way of greater private consumption, such as restrictions on labor mobility and households' declining share of total income.
"As recovery becomes stronger, authorities need to watch out for rising inflation pressures in consumer and asset prices and implement regulatory intervention as needed," Lee said.
The bank predicted the consumer price index, the main gauge of inflation, would grow 3.6 percent from a year earlier and 3.2 percent in 2011.
The report said China may tolerate a slight appreciation of the yuan this year and into 2011, against the backdrop of sustained economic growth, increased inflation and a rising current account surplus.
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