Economy to grow steadily despite problems
(Xinhuanet)
Updated: 2005-08-14 10:48

Many economists disagree.

The grain price will not fall too much due to the policy support and the government will adjust the prices of public utilities and services, main factors of the CPI, according to the market, said Zhu Baoliang, chief economist with the State Information Center.

The surge of oil price will also help to raise the CPI, said Zhu.

Though the CPI in the first quarter is low by international standards, it alone does not mean the deflation is inevitable, Xie Fuzhan said.

Factors of capital prices and prices of producing materials should also be taken into consideration, Xie said.

Economists believe that the recent reform on China's RMB exchange rate formation mechanism will not make the CPI down too much.

As for China's economy in the mid-and-long run, most economists hold that it has entered a stage of stable growth and the existing problems will have little negative impact.

There are some factors contributing to the stable economic growth: the momentum of the investment growth remains and export plays a more important role in driving the economy, Qiu Xiaohua, deputy director with the National Bureau of Statistics (NBS) said.

Besides, the demand for the upstream products stay high and residents' consumption grow steadily, he said.

It is normal for such a large scale economy as China to grow at between 7 percent and 9 percent, which is also the target for the macro control, Xie said.

The world's leading investment bank Goldman Sachs has adjusted its expectation of China's economic growth this year from the previous 8.8 percent to 9.2 percent.

The bank holds that China's domestic demand is on the rise along with its soaring exports and that the CPI will continue rise mildly to the end of this year.

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