BEIJING, Dec. 5 -- China's economy will likely grow by 9.4 percent this year, and will see continued fast growth next year, Ma Kai, the State

Chinese banknotes on display in Beijing. (AFP)

Development and Reform Commission's (SDRC) minister, has been quoted as saying by state media.

    China's economy has been growing at an average rate of 9.5 percent in the past two years. Its gross domestic product ( GDP) grew 9.4 percent in the first nine months of 2005.

    Speaking following a national gathering of top leaders and economic policy-makers, Ma said fixed-asset investment for the whole year is expected to increase by 25 percent, while retail sales will increase by 13 percent.

    This year, the main inflation index, the consumer price index, will rise by no more than 2.0 percent, the Beijing Morning Post cited Ma as saying.

    Next year, the government will aim for fast, stable growth for the Chinese economy, but will make more efforts to restrain overproduction to avoid overheating in several sectors, he was cited as saying by Xinhua news agency.

    "More efforts will be given to addressing the challenges brought by oversupply in some industrial sectors," said Ma.

    He warned that oversupply in the steel, coke and auto sectors are threatening jobs.

    "If we don't effectively address the problem immediately, a large number of companies will go bankruptcy and many people lose their jobs," said Ma.

    Statistics from his commission showed that in October, steel prices fell as low as those in 2003. Prices of some steel products are even lower than the production cost, Xinhua said.

    Credit loans to these overheated sectors must be tightly controlled next year, Ma said.

    Instead, priority will be given to projects that improve the living standards and working conditions in rural areas, as well as basic education, public health and scientific research, he said.

    While preventing excessive investment in overheated sectors, the government also hopes to increase domestic consumption to maintain economic growth.

    To do that, Ma said China will raise the income of urban residents, such as increasing public servants' salaries, and hiking the minimum wage for urban residents.

    Increasing farmers' income, however, will be more difficult, Ma said, due to falling grain prices and the rising costs of farming material.

    Grain prices started to fall from April this year. In October, it was 0.8 percent lower than that of last October, Xinhua said. But the prices of farming materials rose 9.1 percent in October compared with last year.

    Ma said China would grant cash subsidies to farmers to buy chemical fertilizer and diesel next year.

    The country would also take concrete measures to help farmers raise poultry, he said. Many farmers sustained heavy losses from the mandatory culling of poultry to prevent the spread of bird flu, which has affected 11 provinces.

    No target figure for economic growth was announced at the end of the meeting. Enditem

    (Source: China Daily/AFP)