By Du Xiaoli (Chinadaily.com.cn)
Updated: 2007-08-07 08:52

China's asset prices are likely to continue rising in the second half, said Fan Jianping, director of the economic prediction department under the State Information Center, at a forum on financial investment.

Although the stock market will not surge as much as it did in the first half of the year, it may reach continuously new records and accumulate increasing risk. Economic growth in the second half is predicted to be slightly lower than the first half as the GDP growth reaches 11.3 percent for all of 2007.

China's current price hike is not cost-push inflation due to rising wages and the country should attach greater significance to the difficult problem of inflation in the form of asset price bubbles, said Fan. Real estate prices will probably also keep increasing in the second half, he said.

Related readings:  Property investment up 28.5% in 1st half  Beijing average housing prices up 1,000 yuan since May  New fund investors outnumber stock investors  Top leadership warns on overheated economy

Fan believes the trend toward overheating is more obvious and that this year's economic growth will be slightly higher than last year. China's economy will still be on the climbing period in this round of economy cycle, he said.

China's CPI growth will not reach 5.5 percent definitely this year, noted Fan. "The whole year's price level will be within the controllable range and there is no need to launch stricter price control policies."

Fixed assets investment maintained a high level in the past six years and the growth rate of fixed assets will keep growing quickly in the second half, according to analysis of combined factors such as loan interest rate and return on investment.

Growth of consumption is accelerated following increased income and improved psychological anticipation for urban and rural residents, Fan said. It is predicted that the growth of total consumption this year will be higher than that of last year.

Fan also predicted that growth in China's foreign trade surplus will slow down in the second half as the effect of exchange rate and tax rebate policies gradually emerge. Rapidly improving international competitiveness of Chinese enterprises is an important reason for the country's expanding foreign trade surplus.