The fundamentals of China's economy are unscathed by the financial meltdown sweeping the world and the mainland would see relatively stable and fast growth next year, the government's top think-tank said. The Chinese Academy of Social Sciences (CASS) forecast that gross domestic product would grow 10.1 per cent this year and 9.5 per cent next year with the consumer price index, the main gauge of inflation, rising 6.5 per cent this year and 4.5 per cent in 2009. Although the academy's projected 2008 GDP growth was down from its previous forecast of 11 per cent, it was still more optimistic than a market consensus of 9.9 per cent this year and 9.1 per cent in 2009. 'The slowdown ... should be read as a normal fluctuation in growth,' it said in a report yesterday. 'There's not enough evidence to say that an economic downturn is taking place.' Last night, state television quoted Li Chao , a People's Bank of China spokesman, as saying China would work closely with foreign central banks to deal with the global financial crisis. 'At the same time, we will - in accordance with changes in international and domestic markets - adopt changes to our policies,' he said. The mainland's GDP expanded at 10.4 per cent in the first half, down from 11.9 per cent in 2007. 'In 2008, China's economic and social development has experienced the biggest challenges in recent years, but the global unfavourable conditions and severe natural disasters have not changed the fundamentals of China's economy ... ,' the report said. It forecast exports to rise 22.6 per cent this year and 21.1 per cent in 2009, with imports rising 30 per cent and 26 per cent respectively. And domestic investment and consumption would keep the economy on track, it said. Retail sales would grow 19.6 per cent in 2008 and 17 per cent in 2009, while fixed-asset investment would increase 26.6 per cent this year and 21.3 per cent next year in nominal terms, CASS said. Some economists are not so confident and believe the mainland will not be immune. UBS economist Wang Tao, who recently revised down mainland GDP growth to 8 per cent next year from the 8.8 per cent, said the mainland would increasingly feel the pinch of the global troubles. Still, she said, 'amid the global recession, it's still pretty good to have a growth rate of 8 per cent'.
