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China economy will Achieve 8% GDP growth this year said China Vice Premier yesterday.



July 23, 2009 – Comments (0)

Most of the growth will be in Infrastructure spending by the Chinese government thru a massive $585B stimulus focused mainly on infrastructure.

5 Infrastructure stocks in China: JST, HRBN, APWR, RINO, CHNG


Last month a bloomberg article said China will Surpass 9% GDP Growth in 2011.

China to Surpass 9% Growth in 2011, Cheng Siwei Says (Update3)

By Bloomberg News

June 27 (Bloomberg) -- China’s economy will grow 8 percent this year and achieve more than 9 percent annual expansion in 2011, said Cheng Siwei, former vice chairman of the standing committee of the National People’s Congress.

The government’s 4 trillion-yuan ($585 billion) stimulus package is having an effect and will aid a full recovery by 2011, Cheng said today at a financial forum in Ningbo city, eastern China.

“Only when China’s growth rebounds to 9 percent can we say the economy has recovered,” said Cheng, whose comments have moved markets in the past. “The economy will certainly be able to regain a growth rate of more than 9 percent in 2011.”

Chinese policy makers have adopted a wary tone in their public statements, with the central bank saying the world’s third-largest economy is at a “critical” stage. Analysts have been bolder, with JPMorgan Chase & Co., the Organization for Economic Cooperation and Development and the World Bank all raising their forecasts for growth in the past 10 days.

Gross domestic product expanded 6.1 percent from a year earlier in the first quarter, the slowest pace in almost a decade. Exports have slumped in the face of recessions in the U.S., Europe and most of China’s trading partners.

‘Still Worried’

“We are still worried the economy may fall into a second bottom,” said Wei Jianing, a researcher at the State Council’s Development Research Center, echoing the government line.

It’s hard to maintain growth “with only government support,” he said, after attending the Ningbo conference.

China should do more to spur domestic consumption, Cheng said. The nation should also develop alternative energy, Cheng said, without offering specific recommendations.

“If the government says the target is 8 percent, then the growth rate will be 8 percent,” he said. “But we need a real, sustainable 8 percent.”

Cheng, who has a master’s of business administration from the University of California Los Angeles, was one of the first Chinese officials with a U.S. degree, and also served as an adviser to the World Bank.

Cheng’s comments have led to market reactions in the past. In November 2007, the dollar slid to record lows against the euro and the Canadian dollar after he said China needed to diversify its foreign reserve holdings.

The central bank on June 25 said the economy is at a “critical” stage -- the same phrase Premier Wen Jiabao used in a June 21 statement -- and pledged to keep pumping money into the financial system to support the rebound. The economy has yet to establish a solid recovery, the bank said.

Growth Estimates

JPMorgan yesterday boosted its estimate for China’s growth to 7.8 percent this year from 7.2 percent, and its 2010 estimate to 9 percent from 8.5 percent. The Organization for Economic Cooperation and Development on June 24 raised its forecast to 7.7 percent this year, up from a 6.3 percent forecast in March, and to 9.3 percent in 2009 from 8.5 percent.

The World Bank on June 18 also increased its estimate for China to 7.2 percent in 2009, up from a 6.5 percent forecast in March, and advised policy makers to delay until 2010 any additional stimulus plan.

Surging investment in fixed assets such as factories, property and roads jumped 33 percent from a year earlier in the five months through May, driven by government spending. That’s helped counter declining exports.

Recovery to the double-digit expansion of 2007 is unlikely, according to Ma Jun, chief China economist at Deutsche Bank AG in Hong Kong.

The current signals of strengthening growth are “reflecting the extremely front-loaded fiscal stimulus,” Ma said in a telephone interview today.

To recover to its “long term” potential of 8 percent to 9 percent economic growth, the government needs to “move toward policies supporting more sustainable consumption recovery,” he said.

--Judy Chen, Dune Lawrence. Editors: Mike Millard, Jane Lee.

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at +86-21-6104-7047 or

Last Updated: June 27, 2009 04:44 EDT

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