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Cary Huang

Official predicts slower expansion from estimated 11.5pc with inflation easing to 4pc
The country's economic growth would moderate to 11 per cent this year from an estimated 11.5 per cent last year, a  government economist predicted just as international investment banks adjust their  forecasts.
Saying  inflation would ease in the second half, Fan Caiyue, a deputy head at the economic research institute under the National Development and Reform Commission, said  in the  China Securities Journal  yesterday  the consumer price index would drop to 4 per cent this year from an estimated 4.7 per cent  last year.
As a consequence, growth in gross domestic product would slow to 11 per cent, Mr Fan said.
Inflation will recede  this year  as food prices drop, he said.  Also holding down output growth will be a tighter domestic monetary policy, and a weaker United States economy, he said.
External rather than domestic factors will pose greater risks to the economy this year, he added, warning  if a recession hits the US, demand for mainland exports will plunge.
By comparison, last year's inflation was more significant along with GDP growth.
Chen Dongqi, another deputy chief of the institute, told the  People's Daily that by his estimate, the CPI rose by more than 6 per cent in each of the last four months of last year.
By his estimate,  GDP  probably expanded 11.5 per cent last year, up from 11.1 per cent the year before.
At a news briefing tomorrow, National Bureau of Statistics chief Xie Fuzhan will unveil key economic data for last year.
Most investment banks agree with Mr Fan,  forecasting slower economic growth and generally the easing of inflation this year. They also cited as factors the US slowdown  because of  a fallout from the subprime crisis and Beijing's tightening policy.
Goldman Sachs forecast growth of 10.3 per cent. Citigroup predicted the highest - at 11 per cent. Moody's Investor Services was more pessimistic, predicting growth in the 'high single digits'.
In terms of the CPI, Credit Suisse still maintained that it would be high at 6.5 per cent, contrasting sharply with the 2 per cent forecast by the State Council's Development Research Centre.
The recent global stock market slump will also have a negative impact on  the domestic economy and prompt many institutions to adjust their forecasts, said Huang Yiping, Citigroup's chief China economist.    Some international financial institutions might adjust downwards their forecast on the mainland's growth in coming weeks, he said.
The government recently set as priorities for this year prevention of  economic overheating and reining in of inflation.  The CPI hit an 11-year high of 6.9 per cent in November, having risen 4.6 per cent in the first 11 months,  up sharply from  1.5 per cent in 2006.
'The mild adjustment in the macro economy, especially an ebbing of the surge in food prices, will help  ease inflationary pressure,' Mr Fan said, adding that food prices will drop in the second half of the year.
On the other hand, he estimated that the country's trade surplus this year will continue to climb to US$320 billion, up 22 per cent from last year's record high.
Meanwhile, investment growth will stay high in the first half, climbing 23 per cent for the full year.
Mr Fan urged the authorities  to keep an eye on external risks and  rising resource prices, saying specifically that surging food prices are a domestic trouble spot.



Economy forecast to grow 11pc this year