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Maintain China's strong economic growth

2010-04-16 11:27 BJT

China's economy is performing well. GDP growth in the first quarter was 11.9 percent higher than in the first quarter of 2009. This figure far exceeds the whole year target of eight percent.

However, a 2.2 percent increase in the Consumer Price Index is causing inflationary pressure. So, will China's economy continue to sizzling in the coming quarters?

China's GDP growth in the first quarter achieved the fastest annual pace in nearly three years.

Zhang Liqun, a researcher from the Development Research Center under the State Council, says the robust increase doesn't mean the Chinese economy has entered an era of continued fast growth. He predicts the growth may slow in the second quarter.

Zhang Liqun, Researcher, Dev’t Research Center, The State Council, said, "The 11.9 percent growth was partly due to low performance during the same period last year. The GDP increased only 6.1 percent in the first quarter of 2009. Meanwhile, the strong growth is still not solid. It's hard to say the increase is sustainable."

As for the CPI, Zhang says that as there are abundant supplies, it's unlikely commodity prices will maintain an upward trend this year.

Zhang said, "The CPI growth may near three percent in the coming months mainly due to last year's low level. But when considering the whole year, I don't see too many new factors to boost prices. So I think the CPI growth will stand below 3 percent this year."

Zhang also says as China's economic growth still relies on domestic demand, there's a small possibility the central bank will raise interest rates in the second quarter. But he says the government's stimulus measures may change slightly.

Zhang said, "Investment from the government will decrease gradually, because the economy has returned to high speed growth. The policy focus will be to make the growth sustainable instead of faster. From this point of view, the government will let the market play a bigger role."

With respect to the red-hot property market, Zhang says policies launched in the first quarter are likely to take effect in the second quarter.

He suggests the government increase supply to help stabilize housing prices. But it will also take time for the move to affect the market.

Editor: Du Xiaodan | Source: