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Varying predictions on China 2009 GDP

Written by Paul Adkins

The following article appeared in today’s China Daily.   They give predominance to the CASS forecast, which is the most optimistic.   This think-tank has proven itself to be very reliable and accurate in its publications, so is worth following.   

China GDP to grow by 8.3% in 2009, says CASS

The Chinese economy is projected to grow 8.3 percent this year, according to a report released by the Chinese Academy of Social Sciences (CASS).

“Since there is a decline in exports, economic growth will mainly depend on consumption and investment. We expect consumption to contribute 4.3 percentage points to GDP growth, while investment may contribute 2 percentage points,” CASS said.

CASS economists said total investment in fixed assets, a key requirement for an 8 percent growth target, was likely to range between 21 and 23 trillion yuan.

Growth in exports and imports, however, may remain negative the whole year, the report warned.

Exports growth may fall by 2.4 percent and imports would decline by 3 percent, it forecast. The total trade surplus for the year was likely to touch $280 billion, CASS said.

The Academy said the consumer price index (CPI) might rise by only 0.8 percent for the year, a significant decline from the earlier forecast of 4.3 percent.

Retail sales may touch 12.5 trillion yuan, an increase of 14 percent year on year, it said. This is 1.6 percentage points higher than CASS’ earlier forecast.

The CASS report has suggested that China should improve domestic consumption in three spheres – rural areas, real estate and infrastructure.

“The government should cut taxes on companies and individuals to increase income in order to boost individual consumption,” Cai Fang, director of the Institute of Population and Labor Economics in the CASS, said.

Meanwhile, a Standard Chartered Bank report on Tuesdaypredicted a lower GDP growth for China in 2009. The bank said its GDP forecast for the country would remain unchanged, at 6.8 percent for the year.

“China’s economy seems to have bounced back in March, thanks to infrastructure spending. However, we wonder about the sustainability of this rebound,” it said.

“China’s economy is investment-dominated. In 2008, investment accounted for 43 percent of all spending, measured from the expenditure side of the national accounts. Consumption accounted for 36 percent, and looks to remain at about this level over the next few years,” Stephen Green, the banks’ head of research said.

Earlier, UBS had upgraded China’s 2009 GDP growth forecast to between 7 and 7.5 percent on very strong stimulus-related bank lending growth.

“The government’s attempt to boost consumption relative to investment and exports is a long-term project. It will depend on bringing incomes up to rich-world levels and completing the social welfare system, and neither is likely to happen in the short term.

In the short term, the stimulus package looks set to boost investment,” Green said.

China 2009 GDP forecast

Written by Paul Adkins

Here is an article which appeared in today’s China Daily.    Articles which appear in the China Daily should always be looked on with some caution.    There is no doubt that the purpose in making predictions such as those in this article is to help make them come true.    But coming out and making such a prediction says something about the confidence levels within China for the future.   This in turn will have flow-on effects for the aluminium industry and the crude oil refining industry.  

For the former, a 9% growth rate should equate to a 12% – 14% growth in aluminium consumption, while for the latter, a return to normal refining levels will restore the inventory levels of green coke.   Currently green coke levels have dropped to a minimum, but mostly because of lack of supply.   If supply returns to something like previous levels, then the aluminium industry is likely to enjoy more stable coke prices.     At least until the latent smelter capacity starts to consume coke at previous rates again.



Here is the article.



9% GDP growth tipped for next year

By Xin Zhiming (China Daily)
Updated: 2008-12-03 06:52


China could next year notch up growth of 9 percent, or even above, as the world’s fourth-largest economy pulls out all stops to stimulate investment and consumption, the nation’s top think tank said on Tuesday.

“I think China can achieve 9 percent GDP growth, or even higher,” said Wang Tongsan, a senior economist at the Chinese Academy of Social Sciences (CASS), at a news conference releasing the academy’s annual economic forecast, or Blue Book.

“The possibility is quite high – it could be at least 70 percent possible that GDP growth reaches 9 percent next year.”

The economic forecast research team said in an article in the CASS blue book that next year, economic growth could reach 9.3 percent, compared with this year’s estimated 9.8 percent.

Zheng Jingping, an official at the National Bureau of Statistics, also said in an article for the CASS book that growth would be about 9 percent next year.

The forecasts are higher than those made by international organizations.

The World Bank said last month that China’s growth may slow to 7.5 percent next year, the lowest since 1990. Though the bank expects 9.4 percent growth this year, it said the global financial crisis would take a greater toll in 2009.

An Organization of Economic Cooperation and Development report said China’s growth next year could be 8 percent, while the International Monetary Fund put it at 8.5 percent.

The CASS’ Wang said the government’s forceful stimulus moves would make a big difference next year. “We believe the pro-active policies to stimulate domestic demand will work and the effect will be impressive,” Wang said, referring to the country’s $586 billion stimulus plan announced on Nov 9.

Local governments have also pledged to follow suit to help prevent the national economy from sliding further after it registered an annualized 9 percent growth in the third quarter of this year, compared to nearly 12 percent for last year.

The central bank slashed the benchmark interest rates by 1.08 percentage points last week, the steepest cut in 11 years, to reduce borrowing costs for enterprises and individuals, and bolster confidence.

More supportive fiscal and monetary policies are believed to be in the pipeline, analysts said.

Given the serious global financial turmoil and economic slowdown, China would not be unscathed but “we should be confident in China’s stable economic growth, or relatively high growth”, Wang said.

He said there are two prerequisites for the GDP to grow by at least 9 percent: The US economy does not significantly worsen and China’s pro-growth economic policies are well implemented.

The CASS team also forecast that China’s consumer price index (CPI), the key gauge of inflation, could drop to 4.3 percent next year from more than 6 percent this year.

“The falling trend of CPI is entrenched,” said Wang, adding it would not rebound in the coming months.

Zheng from the NBS put CPI growth much lower for next year, at around 3 percent.

The urban jobless rate, meanwhile, could rise to 4.5 percent next year from this year’s 4 percent, according to a forecast by Fan Jianping, an economist from at the State Information Center.