(Xinhua)
Updated: 2008-01-11 22:55

China's gross domestic product (GDP) is projected to grow by 10.2 percent to reach 27.93 trillion yuan (US$3.88 trillion) in 2008, and the consumer price index (CPI) is to jump by 4.4 percent, according to a report by the country's major think tank.

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The report, issued on Friday by the Chinese Academy of Sciences (CAS), predicted China's economy would continue to enjoy strong growth, driven by the favorable economic environment.

However, the report said, the growth would be slowed down by the fluctuating prices of resource commodities in the global and domestic markets, as well as long-standing systematic problems of China's economy.

Yao Jingyuan, the chief economist of the National Bureau of Statistics (NBS), said that China's GDP is to grow by 11.5 percent in 2007.

The CAS report echoed previous predictions that the world's fastest growing major economy is likely to expand at a slower rate in 2008 than it did the previous year.

The State Information Center (SIC) predicted a week ago that China's GDP growth would slow to 10.8 percent in 2008.

The academy also predicted a 4.4 percent rise of the consumer price index (CPI) for this year with economic tightening measures taking effect.

But it warned the index could rise to 5.8 percent if the government fails to work out effective control policies.

In 2008, the inflation pressure will continue to mount up, said the report.

In the first 11 months of 2007, the CPI grew 4.6 percent, according to the NBS.

And the annual figure is estimated to stand at 4.7 percent, far higher than the government-set alarm level of three percent.

The report attributed the risks to huge demand of capital goods fueled by fast economic growth, the expanding imbalance of international payments, high prices of natural resource commodities in the domestic and international markets, increasing money supply and soaring housing price.

The CAS experts suggested that, besides the macroeconomic policies already in operation, the country should ensure the food supply to deal with the price hikes at the source.

It should be done to improve the State stock of commodities and speed up tax reform policies on natural resource commodities such as oil and natural gas, the report said.

A healthy real estate market will also contribute, it said.

With effective measures, the CPI growth is likely to slow down in June or July, according to the report.

Taming inflation has been a red hot issue in recent months. The country announced in late December a tight monetary policy for the first time in the past ten years and the central bank increased the interest rates six times last year.

The CAS report also predicted that the primary, secondary and tertiary industries will expand at 4.1 percent, 12 percent and 11.5 percent, respectively.