Three weeks of snow across most of China have "taken a toll on the economy" but the impact will dissipate over the full year, according to renowned economist Fan Gang.
Fan, director of China's National Institute of Economic Research, said here on Saturday the long snow spell would actually stimulate investment, including upgrading the power grid nationwide and improving coal infrastructure.
"The domestic market also has great potential to spur economic development. There is no doubt that such a big economy will encounter various difficulties each year, but the Chinese economy is maintaining stable growth momentum," added Fan. He disputed the views of some analysts that the snow would be a major drag on growth.
Li Huiyong, a senior macro-economic analyst at Shenyin and Wanguo Securities, forecast the gross domestic product (GDP) for the first quarter of 2008 would grow around 10.1 percent, 0.5 point lower than an earlier prediction. This was due to slower growth in exports, investment and industrial production.
He also predicted the consumer price index (CPI) would surge to 6.8 percent in January, 0.3 point higher than in December, and possibly set a new high in February. The Spring Festival, which begins on Thursday, is a traditional time for shopping sprees among Chinese.
The CPI rose 4.8 percent in 2007 and hit an 11-year high of 6.9 percent in November, well above the government target of three percent.
Zhu Hongren, deputy director of the Bureau of Economic Operations with the National Development and Reform Commission (NDRC), said on Friday, "The snow has affected the Chinese economy for the moment. But for the long run, the country will maintain a quick economic growth pace".
Li Rongrong, chairman of the state-owned Assets Supervision and Administration Commission of the State Council (SASAC), said on Saturday the weather would not influence the overall performance of listed companies. Some companies, however, faced interim production difficulties due to energy shipments stalled by transport snags.
On Friday, two new closed-end stock funds gained approval from the China Securities Regulatory Commission, ending a five-month freeze on new funds in an effort to break the fall of domestic equities.
The benchmark index dipped to 4,320.77 points on Friday, nearly 30 percent off its record high of mid-October. Investors sold holdings due to concern over a possible U.S. recession and the country's worst snow in five decades that had caused economic loss of about 53.8 billion yuan (7.5 billion U.S. dollars) by Jan. 31.
The domestic stock market has also seen volatile trading in recent weeks, with shares sinking more than seven percent on Jan. 22, the largest percentage loss in 7.5 months.
Li told shareholders they need not to be too concerned about the sliding domestic market, adding the country would make up the losses due to the snow havoc very soon.
The State Grid and China Southern Power Grid were mobilizing all forces available to fix power equipment and streamline power distribution, according to the SASAC.
Sinopec, the country's largest oil refiner, set up 10 temporary gas stations along the Beijing-Zhuhai Expressway to ease shortages, said SASAC.
The country had also mobilized all available railway containers to move power coal and ease electricity constraints that have hit many areas. The containers only other use should be to move relief materials, Xinhua learned on Saturday from the Ministry of Railways.
The latest ministry figures revealed that more than 42,200 containers were loaded with power coal on Friday, up 12,000 from the previous day, a new record.
The railway line between Datong in the coal-producing province of Shanxi and Qinhuangdao, a port city in Hebei Province, which is a dedicated coal transport route, set a new daily freight record of one million tons.
Chinese Commerce Minister Chen Deming on Saturday called on local agencies to ensure market supply during the Spring Festival season, adding the Ministry of Commerce (MOC) was endeavoring to increase the market supply of vegetables, fruit and meat in snow-strangled provinces.
The MOC, the Ministry of Railway and the Ministry of Communications also held a supply and sale coordination meeting in the southern Hainan Province. It was decided that 158,300 tons of vegetables and fruit will be provinded to the snow-stricken Anhui, Jiangxi, Henan, Hubei, Hunan and Guizhou provinces before Feb. 15.
The country has so far released more than 17,000 tons of pork from its reserves to meet demand in some of the hardest-hit big cities and Guizhou Province.
The General Administration of Customs of China (GACC) ordered its local customs to streamline the procedures for importing snow relief materials and energy products, including crude oil, coal and oil products.
Zhanjiang Customs, a key port in southern China, reduced the crude oil declaration process from three days to half a day.
Goldman Sachs chief economist for Asia, Liang Hong, said the damages brought by the snow would not impede the long-term Chinese economic growth, adding short-term production losses could be offset by a rise in grain production due to the wetter conditions.
However, Liang said the country needed to put more funds into the infrastructure sector, including railways, highways, airports, electricity grid and power plants.
As for the impact to the textile industry, Zhao Qiuyan, a senior analyst with the China Trade Remedy Information website under the MOC, told Xinhua on Sunday, "The impact of snow havoc on textile and apparel exports was limited as more of these products are consumed domestically".
Zhao added with the price increase in food and other daily necessities, the average textile products prices were stable or on the decline, giving them much room to increase sales domestically.
Official statistics revealed that 66.8 percent of the products were sold on the domestic market at the beginning of 2000, while this figure had increased to 75.04 percent by the end of November.
Analysts from China Lianhe Securities held most iron and steel companies would normally have a material reserve that could at least support one month's production and large iron and steel manufacturers had their own electricity stations, so the blizzard didn't affect their daily operation too heavily.
China Merchants Securities analysts believed fire-powered plants and electricity grid companies had suffered some losses from the snowstorm, while those hydropower plants gained more profits against the background of recent electricity shortages.
(Xinhua News Agency February 4, 2008)