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Economy Predicted to Grow Close to 9% Next Year

The growth rate of the Chinese economy next year is expected to be close to 9 percent, a bit of a slide from that of this year, the Economic Information Daily quoted a report from the State Information Center (SIC) as saying on Monday.


Both the domestic and international environments faced by Chinese economic growth next year will be fairly good and Chinese economy is expected to maintain the high growth rate and low inflation in 2006, the SIC report said.


"China's domestic consumption will go on growing rapidly next year," said Hu Shaowei, a senior researcher with the SIC, ascribing this to the stable enhancement of farmers' consumption capacity, the remarkable growth of urban residents' income as well as the improvement of social welfare systems.


Figures show that China's consumer goods retailing volume has kept a growth rate of between 12 to 13 percent for almost 20 months, and it's possible for China's consumption to rise in the near future.


Although China's exports have been growing by over 20 percent for four consecutive years, it is difficult for the country to maintain such a high speed of exports next year, which will surely affect the general economic performance, the CIS report said.


Growing international trade disputes and barriers, the price hike of crude oil, potential uncertainties in the world economy, the possibility of the yuan's further appreciation and the decrease of the export tax rebate will keep China's exports from growing too fast, the report said.


Since China's accession to the World Trade Organization four years ago, rocketing exports have become a robust driving force of China's economy. Over 70 percent of China's economy now depends on foreign trade.


During the Jan.-Nov. period this year, China's foreign trade volume grew 23.5 percent to US$1282.27 billion, with the trade surplus hitting a record high of US$90.8 billion, making it rare as a large country heavily dependent on overseas demand.


Although China's exports may continue to grow next year, the growth rate will drop, according to a CIS report.


The macro-control policies pursued by the Chinese government next year will remain stable and consecutive, said Qian Minze, another CIS senior researcher.


According to China's next five-year guideline (2006-2010), 2006 may be a starting point for the country to overhaul its economy through discouraging overheated investment and stimulating consumption.


In 2003 and 2004, China's annual economic growth rate was 9.5 percent, and in the first three quarters this year, the figure was 9.4 percent.


The growth rate of China's economy is expected to lower to 6.7 percent next year, according to a prediction by Morgan Stanley economist Stephen Roach.


The National Bureau of Statistics (NBS), however, expects the Chinese economy to grow at a rate between 8.7 to 9.2 percent next year, and in the next five years, at an average rate of 8 percent.


(Xinhua News Agency December 20, 2005)


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