The Salomon Smith Barney ( SSB) said Friday that they have recently raised their forecast for China's GDP growth to 8.1 percent in light of the strong growth of the year, reversing a seven-year trend of declining growth rates.
"We believe the year 2000, the first year to show an up-tick in the GDP growth rate since 1992, could herald a new era of accelerating GDP growth of the country, " said Yiping Huang, vice-president for SSB's Asia Pacific economic and market analysis.
Huang said extraordinary export expansion and continued fiscal spending over this period were the keys to growth, with exports gaining 38 percent and imports rising 35 percent on a year-on-year basis.
China's GDP growth reached 8.2 percent in the second quarter following a strong 8.1 percent figure in the first quarter, and industrial production rose 12.2 percent in June and 11 percent in the first half of the year as a whole, the strongest performance since 1997.
Huang also attributed the high growth rates to responses to the government's value-added tax (VAT) rebates for exports, strengthening in other Asian currencies and comparisons from a low base.
The economist explained that among China's exporting industries, textiles was singled out as one of the key contributors to the export growth in the first half of the year, reaching US$23.8 billion compared with US$16.8 billion in the same period of 1999.
"While the export sector will remain strong during the second half of the year, we expect the growth rate to moderate, especially if the US economy gradually slows and other Asian economies follow suit," Huang said.