Economic Trend News
- Economic tightening not necessary: report
Date: 10-Jul-2007 Sources: (Shenzhen Daily)
THE country's economy is showing no signs of overheating despite excess liquidity and the country does not need full-fledged tightening, a research report by the prestigious Renmin University of China said.
China's economy is likely to grow 10.8 percent in 2007, while fixed-asset investment will rise 21.8 percent, the trade surplus will jump 60 percent and consumer prices will rise 3.17 percent, the university said in a joint research report quoted by the Shanghai Securities News on Monday.
'China's economy is still operating on a rapid and healthy track, so relatively high growth in GDP, investment and CPI should not be cited as reasons for a comprehensive tightening,'said the research report, jointly conducted with Donghai Securities and China Chengxin Credit Management Co.
The report's forecast for gross domestic product growth is roughly in line with forecasts issued by the State Information Center, a top government think tank, and the central bank, the People's Bank of China, over the past two weeks.
The country's economy, enjoying its fifth straight year of double-digit growth, expanded 11.1 percent in the first quarter of this year after rising 10.7 percent last year.
But a huge trade surplus, which the university report forecast would reach US$260 billion in 2007, would help boost China's huge foreign exchange reserves by more than US$310 billion from US$1.2 trillion at the end of 2006, causing excessive liquidity.
But as the economy as a whole is healthy, the government should not feel panic over excess liquidity and should channel funds into the development of capital markets and helping to solve structural problems in the economy.
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