BEIJING, Sept. 16 (Xinhuanet) -- China's economic growth has averaged 9.5 percent over the past two decades, and the rapid pace of economic change is likely to be sustained, said the Organization for Economic Cooperation and Development (OECD) in its first Economic Survey on China issued Friday.

    "These gains have contributed not only to higher personal incomes, but also to a significant reduction in poverty," the OECD said.

    "At the same time, the (Chinese) economy has become substantially integrated with the world economy."

    "A large part of these gains have come through profound shifts in government policies, and reforms have allowed market prices and private investors to play a significant role in production and trade."

    A marked evolution in economic policies over the past two decades has led to a long period of sustained economic expansion, and China's national income has been doubling every eight years and this has been reflected in the reduction of the poverty rate to much lower levels, according to the OECD survey.

    "By some accounts, over half of the reduction in absolute poverty in the world between 1980 and 2000 occurred in China."

    Considerable challenges face China's economy, not the least of which is a rapid increase in the age of the population, but continued evolution of economic policies, especially in the areas of the allocation of capital, labor mobility, urbanization and the creation of an improved framework for the development of the private sector of the economy, should ensure that this development momentum is sustained, it said.

    Acknowledging China's market economy status

    China is already a country with a market economy, said Korom Zay, director of Country Studies Economic Department of the Organization of Economic Cooperation and Development (OECD) on Friday.

    Korom Zay made the remark at a press conference where the OECD publicized its first Economic Survey on China.

    According to Korom Zay, China's private economy accounts for two thirds of the national economy, almost the same as that of Britain before Margaret Thatcher, former prime minister launched her famous reform to change most state-owned enterprises into private ones in early 1980s.

    Before Thatcher's reform, Britain had already been a recognized market economy country, so China is also a market economy country, he said.

    China's economic growth has averaged 9.5 percent over the past two decades, and the rapid pace of economic change is likely to be sustained, said the OECD in its first Economic Survey on China.

    "These gains have contributed not only to higher personal incomes, but also to a significant reduction in poverty," the OECD said.

    "At the same time, the (Chinese) economy has become substantially integrated with the world economy."

    "A large part of these gains have come through profound shifts in government policies, and reforms have allowed market prices and private investors to play a significant role in production and trade."

    Economy to slow down to 9.0 pct in 2005

    China's economic growth is expected to witness a very slight slowdown to 9.0 percent in 2005 and rebound to 9.2 percent next year, the OECD said in the new report.

    The slowdown is the result of further weakening of investment owing to continued administrative control in targeted industries and completion of projects that started before the tightening, according to the report.

    "Private consumption will likely remain robust, and external demand is also likely to be strong, " says the report. "Imports, on the other hand, are expected to slacken."

    The report projects that inflation in China will climb to 4.0 percent this year and remain the same growth rate in 2006.

    "Inflationary pressure may arise from the pass-through of depreciation in the effective exchange rate and the rise in intermediate goods prices, " says the report.

    "But the increase in capacity due to strong investment and hence rapid accumulation of capital stock will limit further acceleration in inflation," says the report.

    According to the report, the policy stance will continue to be tight in 2005. Tax revenue is expected to remain buoyant, and the budget deficit will likely to decrease further.

    Monetary policy will also be tighter with the central bank reducing its target for the growth of the money stock by two percentage points, says the report.