Economy may hit 9% in Q1
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China's economy may expand an annual 9 percent in the first quarter of 2011 as investments are expected to be robust this year, the start of the country's 12th Five-Year Plan, according to a report by the State Information Center Thursday.
But policymakers should be aware of rising inflation, and the Consumer Price Index, the main gauge of inflation, may climb 5 percent in the first three months, according to the research unit under the National Development and Reform Commission, China's top economic planning agency.
"Many new projects will start this year and will power development in the next five years," the report said. "Meanwhile, China is beefing up efforts to revamp its economic structure and has decided to channel more funds into strategic industries and both initiatives will boost investment significantly."
The government will also allocate more capital to build affordable homes, the report said.
China's economy grew 10.3 percent last year, up 1.1 percentage points from 2009. The pace in the fourth quarter of 2010 grew 9.8 percent, up from 9.6 percent in the previous three months due to a boost in domestic consumption.
The report said China's industrial production and retail sales will continue to grow in a stable manner in the following months but prices may become a thorny issue.
"With frequent natural disasters disrupting production of food and a market still flush with liquidity, consumer prices may again rise above 5 percent this quarter," said Fan Jianping, chief economist at the center.
He suggested the government increase food supply and further tighten monetary policy to curb inflationary expectations.
The CPI rose 4.6 percent from a year earlier in December after hitting a 28-month high in November.
China has hiked interest rates twice since October last year to tame rising inflation. Some analysts expect the central bank to raise interest rate this quarter.
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