labels: economy - general
China''s economy expected to grow at 9.5 per cent in 2007 news
13 November 2006

Mumbai: China's economy is expected to grow at a moderate 9.5 per cent in 2007 amidst a slow-down in exports, domestic consumption and investment — the three main engines of China's economy — the State Information Centre (SIC), a think tank under the National Development and Reform Commission, has said.

China's trade surplus is expected to reach $177 billion, up $30 billion from 2006. Gross domestic product (GDP) grew by 10.7 per cent in the first nine months this year

Capital formation is expected to hit $1.68 trillion in 2007, up 20 per cent — 6.5 percentage points lower than its prediction for the year 2006. Exports will jump 15 per cent in 2007, 9.5 percentage points slower than in 2006. China tightened fiscal policy two years ago in the hope of capping the galloping fixed asset investment and preventing possible overheating of the economy.

The government is following a tight money policy to ward off possible overheating of the economy amidst excessive bank loans and a surging trade surplus. The monetary policy would also try to maintain the continuity and stability of the macro-control policies, according to the People's Bank of China (PBOC).

According to the SIC, capital formation is expected to hit $1.68 trillion (13.45 trillion yuan) in 2007, up 20 per cent, but 6.5 percentage points lower than the figure predicted for 2006.

The SIC also suggested the government institute heavier taxes on fossil energy such as coal, oil and natural gas, in order to improve energy efficiency.

China should follow a slightly more stringent monetary policy in 2007, restricting newly increased loans to three trillion yuan, said the report.

To achieve a balance in international payments, the think tank suggested adjusting the tax system and speeding up the standardisation of corporate income tax for domestic and overseas-funded companies.

It said that China could use its ample foreign reserves to buy in reserves of strategic resources like crude oil and major metal products when prices on the international market are low.

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China''s economy expected to grow at 9.5 per cent in 2007