BEIJING, Nov. 12 (Xinhua) -- China's red-hot economy
is likely to cool during the fourth quarter as a result of tightening efforts, a
think tank report said on Monday.
Gross domestic product (GDP) is expected to expand
11.2 percent in the fourth quarter, according to the State Information Center
(SIC), a think tank under the auspices of the National Development and Reform
Economic growth would hit 11.4 percent for the whole
of 2007, slightly below the 11.5-percent increase registered in the first three
quarters of the year, the report said.
The economy is on track for a fifth year of
double-digit growth. The previous full-year growth record was 11.1 percent, in
The SIC report said the government's macroeconomic
policies should continue to target overheating risks.
The key inflation indicator, the consumer price index
(CPI), would ease to 5.9 percent in the fourth quarter from 6.1 percent during
the third quarter, which would help stabilize the full-year figure at about 4.6
percent, according to the report.
The CPI rose 4.1 percent year-on-year in the first
nine months and hit an 11-year high of more than six percent in August.
The report said prices of pork and eggs, which
contributed significantly to rises in the CPI, are expected to be contained
during the fourth quarter by a government crackdown on food price hikes and
subsidies offered to pig breeders.
However, it said that inflationary pressure would
persist as grain prices continued to rise, which could have a negative impact on
feedstuff prices. Further, industrial prices could face rising pressure from
recent surges in world crude oil prices.
The report urged the government to closely monitor
It said that prices of dairy products and seafood,
which previously rose only slightly, required particular scrutiny. Otherwise,
shortages of these items could cause price spikes next year, similar to the
experience with pork prices.
The SIC report said consumption would remain buoyant
in the fourth quarter, the result of rising incomes and strong economic growth.
It said inflation-adjusted retail sales for the whole
year would grow 12.8 percent, 0.2 percentage points more than a year earlier.
Fixed-asset investment, which contributes more to
economic growth than consumption, would continue to expand in the fourth
quarter. However, the growth of such investment would decelerate as a result of
stricter controls on investment, according to the report.
Macroeconomic control measures that were announced
starting in the second and third quarters, including interest-rate hikes and
higher reserve ratios for commercial banks, would help curb investment growth in
the fourth quarter.
In the latest move, the central bank on Saturday
raised the reserve requirement ratio for the ninth time this year, pushing the
ratio to a ten-year high of 13.5 percent.
One-year benchmark interest rates have been raised
five times so far this year, and investors expect more interest rate hikes.
The SIC forecast said fixed-asset investment would
rise 25.5 percent this year, up one percentage point from a year earlier.
China's exports, another powerful engine of economic
growth, would grow 22.5 percent in the fourth quarter, compared with 28.9
percent a year earlier. Export growth would be slowed by the decelerating U.S.
economy and reduced Chinese export tax rebates that took effect on July 1, it
The report estimated the 2007 trade surplus at 273
billion U.S. dollars, up almost 100 billion dollars from the 2006 figure of
177.47 billion dollars.
The think tank said the government should continue to
curb energy use through tax and price measures, and it also urged the government
to hasten price reform for petroleum products and electricity.
It also advised the government to tighten fiscal
discipline in the fourth quarter to help cool the economy.