The latest edition of the Economic Blue Book, compiled by the Chinese Academy of Social Sciences, has been published. Titled Analysis of China's Economic Prospects—2005 Spring Edition, it forecast key macroeconomic indicators as well as trends and problems in economic development for this year.
It said the economy would grow 8.9 percent this year, higher than the central government's expected figure of 8 percent, but that lower GDP growth would, to a certain extent, help to control unstable and unhealthy factors, adjust economic structure and improve weaknesses.
Added value in agricultural, industry and service sectors will see lower growth, with rates of 5, 10.4 and 7.6 percent respectively. Slowing growth in the agricultural sector would be due to its higher benchmark, while that in the service sector would be held back by slowed GDP growth, the report said.
Added value in heavy and light industries is expected to grow 10.9 and 9.7 percent, both of which are lower than that of last year. Heavy industry should grow faster than light industry, which indicates that the economy is still in a climbing phase of the economic cycle.
The report said total fixed-asset investment in 2005 would reach 8.4 trillion yuan (US$1 trillion), with an actual growth rate of 14.9 percent and nominal growth rate of 20.4 percent. It still adds impetus to macroeconomic growth despite a slow down.
The ratio of fixed-asset investment to GDP, about 54 percent this year, will reach a new high, and the report warned that special attention should be given to it.
Commodity prices are expected to continue to rise. The indexes of retail, consumer and investment prices would grow by 2.4, 3.4 and 4.8 percent respectively, the report said.
The average disposable income of urban residents was predicted to grow 7 percent, while growth of farmer’s net incomes would remain at 5.5 percent, the second highest in recent years.
Steady consumption would also be an important stimulus for macroeconomic growth, said the report. The total consumer retail volume is expected to reach 6.1 trillion yuan (US$734.5 billion), with an actual growth rate of 10 percent and nominal growth rate of 12.7 percent. These would basically be the same as the first half of last year.
Most international institutions have forecast that world economic growth and trade volume would rise in 2005. This would facilitate the rapid growth in China's foreign trade, the report said. It forecast that imports and exports would grow 28.6 and 29.4 percent respectively. Also, the trade surplus this year would continue to increase.
(China.org.cn by Tang Fuchun April 30, 2005)
