'China can keep GDP above 8% in 2009'
Updated: 2008-12-18 07:36
By Lillian Liu(HK Edition)
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China's economy can achieve an above-8-percent growth in 2009 despite the challenges it faces, said economists at CITIC Ka Wah Bank. But, the country will see sharply contrasting performance in different sectors.
"Of the 4 trillion yuan (stimulus package), 1.2 trillion yuan could be new spending, to the tune of 600 billion yuan per annum for 2009 and 2010," said Liao Qun, senior vice president and chief economist of CITIC Ka Wah.
"It is projected that fixed asset investment and the GDP will grow 25 percent year-on-year and 9.3 percent year-on-year to around 17 trillion yuan and 30 trillion yuan respectively in 2008," Liao told reporters at a press briefing yesterday.
He estimated that the 600 billion yuan in new spending from the stimulus package will directly boost fixed asset investment and GDP by about 3.5 and 2 percentage points, respectively.
JPMorgan said in a research report that it has little doubt that massive spending in infrastructure and other areas will provide some relief in 2009 by boosting domestic demand and spurring the creation of new jobs.
"It has been reported that fixed asset investment plans proposed by local governments have amounted to almost 20 trillion yuan in spending. Senior railway officials have estimated that railway construction projects could generate 6 million jobs next year," said Jing Ulrich, managing director and chairman of China equities at JPMorgan.
However, the growth momentum will be unbalanced with infrastructure and related sectors seeing red-hot growth and the market-oriented exports recording weak results, the CITIC Ka Wah said.
Some 45 percent of the government's 4 trillion yuan stimulus package will go to railways, highways, airports and power grids. About 25 percent is for post-disaster reconstruction, while infrastructure projects in rural areas will receive 9.3 percent of the money pool, according to data from the National Development and Reform Commission (NDRC).
On the other hand, manufacturing and export sectors won't have that much support from the central authorities.
"Some manufacturing sectors have seen overproduction, and the government will not add fuel to those sectors," Liao said.
The latest data show that China's value-added industrial growth decelerated from over 13 percent year-on-year in the first three quarters of 2008 to 5.4 percent year-on-year in November 2008.
The World Bank trimmed last month its 2009 forecast on China to 7.5 percent from 9.2 percent, amid concerns that the sharp downturn in the export and property sectors will hurt the country's economy.
(HK Edition 12/18/2008 page2)