China's economy may grow at the fastest pace in 12 years in 2007 and inflation is likely to exceed the central bank's target, the People's Bank of China said in a report published on Friday.
GDP is forecast to grow 10.8% from a year earlier, the fastest rate since 1995, the central bank said in the China Securities Journal today. Consumer prices may rise 3.2%, compared with the 3% target. Premier Wen Jiabao recently indicated that the central bank needed to raise interest rates or further restrict bank lending. The People's Bank of China, last raised its key interest rate to 6.39%, in March. According to Bloomberg, China last year reported gross domestic product of 20.9 trillion yuan ($2.6 trillion). That compared with Germany's $2.9 trillion, Japan's $4.5 trillion, and the US's $13.3 trillion. On Thursday, the Ministry of Commerce said that China is trying to bolster imports to more than $1 trillion by 2010 - up more than 25% from $792 billion last year - in an attempt to balance trade. The projected 2010 imports figure is almost equal to the country's total trade volume in 2004.
To restructure the country's exports and narrow its widening trade surplus with major trade partners - which hit $177.5 billion last year - the government has adopted a range of measures to curb exports. In the latest move to rein in exports, China announced that it will eliminate or cut tax rebates for more than 2,800 export items effective July 1. Export tax rebates for 553 categories, such as cement, fertilizer and non-ferrous metals, will be eliminated. Rebates for another 2,268 products, described as “easy to trigger trade frictions”, will be slashed from 8-17% to 5-11%. They include garments, toys, steel products and motorcycles. The reduction of export tax rebates on resource-intensive and polluting products is necessary for China's own development, Wang Xinpei, spokesman for the Ministry, said. “China has never pursued a big trade surplus. The current surplus is a result of international demand and supply,” he said.
China's economy grew 10.7% in 2006 while the consumer price index accelerated by 1.5%. GDP expanded by 10.9% in 1995. (finfacts.com)