Over the next two years, China's economic growth will moderate slightly due to tight macroeconomic controls and the effect of government efforts to change the growth pattern, the Asian Development Bank (ADB) announced yesterday in its annual publication.

 

The Asian Development Outlook 2007 has laid out GDP predictions for the next two years in China, claiming the economy will grow 10 percent this year and 9.8 percent the next.

 

"The performance of the Chinese economy was exceptional in 2006 and will remain strong in 2007 and 2008," said Zhuang Jian, an economist at the multilateral development bank.

 

Last year's 10.7 growth was in great part thanks to a combination of rapid growth both in exports and fixed asset investments. A change likely to take place in 2007 is the measurable impact of moves to halt the double-edged sword of runaway fixed asset growth.

 

Among the steps seen to slow down the economy has been the People's Bank of China's decision to hike the base lending rate from 5.58 to 6.39 percent and the reserve requirement from 7.5 to 10 percent in the past year to curb credit growth and investment expansion. 

 

Major government agencies such as the National Development and Reform Commission and the State Environmental Protection Administration have also brought aims for a greener China to bear by raising energy efficiency and environmental requirements for investment.

 

However, the ADB report cautiously points at the absence of any clear trends to be had from the latest monthly data charts.

 

Figures from the National Bureau of Statistics have seen factory output in January and February combined grow 18.5 percent from a year earlier, compared to 14.7 percent in December and 16.2 percent for the first two months of 2006. Meanwhile, fixed-asset investment growth spiked from 20 percent in last year's fourth quarter to 23.6 percent in January and February.

 

Addressing the seeming lack of any progress, Zhuang conceded "such progress was limited on most fronts," adding that "difficulties in shifting the growth pattern will not be addressed overnight."

 

Further advice provided by the ADB relates to China strengthening its social security system, increasing spending on education, healthcare and rural development, and rallying to improve energy efficiency and environmental protection.

 

(China Daily March 28, 2007)