Experts interpret 8% growth rate

Premier Wen stated in his work report that China 's GDP would grow by eight percent in 2006, higher than the 7.5 percent set for the next five years, although two percent lower than the ten percent in the past three years.

Coordinated development needs fast speed

In view of current situation, it is still necessary and possible to maintain a high economic growth rate for a period.

Li Chaodong, vice president of Nu Skin China, said the current government is pragmatic, it places people's interests as the first priority. Chinese economy must be maintained at a certain speed in order to meet the ever-increasing material and cultural needs. Only when economy grows can people's living standard be improved and enhanced.

Chu Xiangyin, professor of University of International Business and Economics, said China is a populous country, the newly-born population each year in China is almost equivalent to that of a middle-sized country in Europe, the government will have to create job opportunities for about 10 million people each year.

In the meanwhile, as rural surplus labors are seeking jobs in cities, employment pressure will be heavier. If Chinese economy could not grow by a certain rate, China would not have the ability to provide employment opportunities for its vast population.

In addition, China must keep a relatively higher growth rate if it wants to achieve coordinated development as economies in different regions are very uneven. Urban areas and the eastern coastal areas are relatively developed, while remote areas, central and western regions are still backward.

According to Li Chaodong, the world economy is at a relatively high growth period. Estimates from World Bank and International Monetary Fund said the growth rate of the world economy for 2006 will be the same as that of 2005. That is to say, there will be no major changes in world economy, that means it will provide a better external environment for China.

Chu Xiangyin noted China is in good condition in view of the three driving factors: investment, demands and exports. In investment, state investment is still large. And there is massive private fund which is still seeking for investment opportunities.

In demands, with the rise of per capita income, a series of measures will be carried out to promote demands, which will have positive effects on market demands. In foreign trade, the total foreign trade volume in 2005 surged by 23.2% to reach 1422.12 billion US dollars, China jumped to world No. 3 in terms of foreign trade. Though China experienced more trade frictions in recent years, the overall trend will not be reversed.

Wall Streets watching Chinese economy

International community, multinational corporations are concerned about China's economic growth. One of the factors that China could attract so many foreign companies to settle down is based on their expectations on Chinese economy.

According to Xie Guozhong, chief economist of Morgan Stanley Asia Pacific, both Stephen Roach, world renowned economy analyst and he ever predicted that China's economic growth will slow down in 2006.

Mr. Roach ever estimated a 6.7 percent of GDP growth, but his major concern is at China's exports. Xie's focus lies in the internal structure of China's economy, the largest negative factor could be the productivity surplus. Take 2005 for example, the fixed assets investment took up 40 to 50 percent of that of GDP. If the productivity surplus leads to decline in investment, economic growth would be accordingly affected, said Xie Guozhong.

In addition, foreign investors are slowing down their pace to move factories to Chinese mainland. It is estimated this year's exports would not grow by 28 percent as they did last year. กกกก

Shi Yi'en, senior consultant of World Federation of Large Enterprise, said no matter in London or Wall Streets, many people are concerned about Beijing and China's economy, they not only take China as a market, but also a part of their global strategy.

In the past two years, Chinese government began to pay attention to the structure imbalance and the possibility of bubbles in the sectors of IT and real estates, as well as the over dependence on exports.

Premier Wen's work report have addressed those problems, calling for in-depth reform, improving industrial structure, and maintaining balanced development.

Eight percent growth rate to test macro-control

The Chinese economy has realized a soft landing since macro-control was carried out in 2002. However, structural contradictions, the paradox between high speed and high energy consumption, gap between rural and urban areas, rich and poor are still protruding.

Professor Chu said 2006 is the beginning of the 11th five year plan, so it is important for China to realize the eight percent growth rate this year. On one hand, China will realize balanced development in terms of industrial structure, imports and exports, domestic and international market. On the other hand, development in rural and urban areas, developed and underdeveloped regions should also be balanced.

According to Shi Yi'en, the respective growth rate in the past three years was targeted at 7 percent, 7 percent and 8 percent, but the actual growth rate topped 10 percent.

The investment-driven fast growth brought some unstable factors. Fixed assets investment rose too quickly. Adverse consequence began to emerge in excessive investment in steel and aluminum. Insufficient consumption in rural areas could hardly stimulate economic growth. Institutional obstacles affecting economy still exist.

Professor Chu said major contradiction of this year lies in the soaring supply and steady or even less demands. Major development goals for national economy and social development have been proposed in Premier Wen's work report vowing to readjust economic structure and change the growth mode. Energy consumption per unit GDP output would be reduced by about four percent; the consumer price hike would be three percent up as a whole; nine million new jobs would be created in urban areas with the registered unemployment rate in urban areas of no higher than 4.6 percent; international payment would keep balance. This is the first time China puts energy index as one of its macro-control targets.

According to Li Chaodong, it is vital for China to avoid risks and prevent ups and downs in order to keep a stable growth. It is not very difficult to realize eight percent growth rate, but balanced development is more important. China should also prevent local governments from pursuing speed at the cost of quality and efficiency.

The eight percent growth rate also signals that China needs a steady growth, with the quality, efficiency and sustainability at the top priority.

By People's Daily Online