China's economy faces 'complex' year: official
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2010 will be the most complex year for Chinese economy in the past decade, as the country faces multiple challenges in the wake of the global financial crisis, an official from the National People's Congress, China's top legislature, said Tuesday.
Yin Zhongqing, deputy director of the Finance and Economy Committee of the National People's Congress made the remarks at the 8th Transnational Corporations China Forum in Beijing.
"China managed to achieve growth of 8.7 percent last year despite the global financial crisis, but it is going to face greater challenges and risks this year as many deeply-rooted problems remain to be solved, coupled with newly-emerged issues," said Yin. "This is the consensus among the members of my committee."
Yin's committee participated in preliminary deliberations on the Government Work Report and the 2010 Draft Plan for National Economic and Social Development, in the run up to the annual parliamentary meeting that opens this week.
Yin said that the government needs to watch out for big fluctuations in the economy this year.
"Sharp rises and big falls in economic growth are both likely this year," said Yin. "What worries us most is not recession but overheating."
According to Yin, significant overcapacity has appeared in a wide range of industries from auto manufacturing and steel, to shipping and oil refining.
The government needs to fine-tune its macro measures to avoid a "W-shaped" pattern in which the economy experiences another sharp fall after overheated growth.
The country's economic growth last year was largely driven by fixed asset investment which increased by 30.1 percent to 22.48 trillion yuan. This year, as the effect of stimulus policies wears off, the economy might lose momentum if consumption and personal incomes fail to rise, according to Yin.
Yin also urged the government to damp down expectations of inflation and guard against structural inflation.
"China's moderately loose monetary policy provided strong support for the country's economic growth faced with the financial crisis, but it also helped create expectations of inflation reflected in rising consumer prices and soaring asset prices," Yin said.
Surplus liquidity, soaring asset prices, rising consumer prices as well as imported inflation will lead to structural inflation in the country if effective measures are not taken, he warned.
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