Arab Today, arab today 76 gdp increase seen for 2014 in china
Last Updated : GMT 21:55:33
Arab Today, arab today
Arab Today, arab today

7.6% GDP increase seen for 2014 in China

Arab Today, arab today

Arab Today, arab today 7.6% GDP increase seen for 2014 in China

Beijing - XINHUA

China's economic restructuring is expected to gain ground next year, with consumption set to overtake investment as the main driver of growth, a senior economist said on Wednesday. Peng Wensheng, chief economist and managing director of China International Capital Corp, an international investment bank headquartered in Beijing, predicted that the world's second-largest economy will see a 7.6 percent GDP growth rate in 2014 and that 4.1 percentage points will be contributed by final consumption expenditure. Gross capital formation, or investment, is likely to account for 3.4 percentage points of next year's growth rate, with the other 0.1 percentage point coming from the net exports of goods and services, Peng said. "Reforms rolled out by the 18th Central Committee of the Communist Party of China will help correct the structural imbalances in the economy" in terms of eliminating agencies and decentralizing the government's power, lowering the proportion of turnover taxes and turning migrant workers into full urban residents, he said. "Such measures will help narrow the income gap, stimulate consumption and further lower the savings rate," Peng said. In the first three quarters, investment was the economy's strongest driver, contributing 55.8 percent, or 4.3 percentage points of GDP growth. Consumption netted 45.9 percent, or 3.5 percentage points of the growth, and net exports dragged down the GDP by 1.7 percent, or 0.1 percentage point, the National Bureau of Statistics said. From January to September, the country achieved an average GDP growth rate of 7.7 percent. In the third quarter, the growth accelerated to 7.8 percent from 7.5 percent in the second quarter, all above the whole-year target. Peng forecast this year's GDP to rise by 7.6 percent from a year earlier. The CICC economist also said that in 2014, more moderate fiscal expansion and a more cautious monetary policy are likely and may slow the growth of fixed-asset investment, as the government will take further measures to control financial systemic risks, especially for local government debt issues and the "shadow banking" problem. "But adjusting the economy's structure could eliminate the economic foundation for the rapid increase in property prices we have seen over the past decade," Peng said. "The more successful structural reform is, the sooner the real estate bubble will burst." Liang Hong, head of the research department and managing director of CICC, said that China's A-share market likely will deliver an annual return of 20 percent in 2014, following four years of market sluggishness, as economic momentum is expected to continue in the first half of next year and market-based reform will bring more "policy-guide" good news for the capital market. "The well-targeted reform initiative will bring more positive changes, including boosting economic vitality and improving efficiency, especially for the State-owned companies," Liang said. As the State-owned companies already have taken measures to control operational costs and promote profitability, and the managers are trying to improve corporate governance, the State-owned companies' shares, or the "blue chips", may show higher investment values in the near future, she added.

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