GDP growth understated: Chinese economist

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Last updated at: (Beijing Time) Friday, September 26, 2003

GDP growth understated: Chinese economist

Official Chinese economic data has been viewed skeptically for decades, but one prominent Chinese economist is making a charge rarely heard before.

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Official Chinese economic data has been viewed skeptically for decades, but one prominent Chinese economist is making a charge rarely heard before.

Wu Jinglian says the country's economy actually grew faster during the first half of the year than the official 8.2 percent announced by the government.

"The first half's growth rate was more than 10 percent," Wu said. "And the economic growth for the whole year could be more than the government's forecast of 8.3 percent."

Wu, who works for the States Council's Development Research Center, bases his statements on numbers from the country's statistics bureau.

The national economy has entered a new round of growth, based on booming industrial production and investment in fixed assets, Wu said at a forum organized by the State Council's Development Research Center in Shanghai yesterday.

Wu said China faces little danger of high inflation in the near term, with the benchmark consumer price index forecast to rise an annual 0.6 percent this year and 1 percent in 2004.

However, he noted the rapid growth of money supply would probably lead to asset inflation, or property price hikes, which is more dangerous than an increase in consumer prices.

"The economic growth has put an onus on domestic banks, which are issuing a large amount of loans," Wu said.

Domestic banks issued 1.8 trillion yuan (US$217 billion) worth of loans in the first half of 2003, almost equalling the 1.85 trillion yuan worth of loans issued in all of 2002.

"The property prices keep rising, but the investment is mainly bor-rowed from the banks," Wu noted.

China's money supply is growing at its fastest pace ever as banks awash with cash are eager to lend. M2, which measures all money in circulation and in deposit accounts, grew 22 percent year on year to 21 trillion yuan last month, with bank loans rising about a quarter to 15.3 trillion yuan.

The State Information Center, a government think-tank, also said in a report yesterday that some provincial governments made large investments in local infrastructure projects, betting on continuous economic expansion.

According to the think-tank's report, national fixed asset investment is likely to rise by about 20 percent this year.

Fixed-asset investment will contribute about 60 percent of China's overall economic growth this year, the report said.

The center warned excessive investment in some sectors, including real estate and infra-structure construction, could cause economic problems in the future.(Shanghai Daily news)

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