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Turning point in China's economy growth at hand

2012-12-10 12:23 Xinhuanet     Web Editor: Liu Xian comment
Xinhua File Photo

Xinhua File Photo

China's consumer price index (CPI), a main gauge of inflation, grew 2 percent year on year in November.

It indicated that the inflection point of price of commodities loomed, which would fuel the inflationary pressure, analysts said.

The National Bureau of Statistics announced that November's inflation rate rose 0.1 percent from a 33-month low of 1.7 percent in October.

China's producer price index (PPI), which measures inflation at the wholesale level, fell 2.2 percent year on year in November, the NBS said.

It marked the ninth straight month of decline after the PPI dropped in March for the first time since December 2009.

However, the decline was smaller than the 2.8-percent decrease in October, suggesting that manufacturing activity has improved.

"A combination of low inflation and modest economic growth is surely a desirable outcome for China in the difficult year of 2012," said Wang Jun, an expert with the China Center for International Economic Exchanges.

TURNING POINT OF CPI IS EMERGING?

"Rises in the prices of pork and vegetables mainly contributed to the climbing CPI growth," said Lian Ping, chief economist at the Bank of Communication.

Food prices, which account for nearly one-third of the weighting in the calculation of China's CPI, rose 3 percent in November from one year earlier, pushing the index up 0.95 percentage points.

"It is gradually turning cold in November and the food supplies were disrupted by bad weather across the country." Lian noted. Vegetable prices jumped 11.3 percent year on year in November.

Lian predicted that the November's reading marked a turning point.

Affected by recovering domestic demand, increasing pork prices and rises in labor and land costs, prices will continue to increase in the next year, he added.

Besides, some economists and experts expressed the similar views that China was already on a moderate recovery path.

"For 2013, we label it a year of recovery.... Our forecast is that China's GDP growth will go up from about 7.6 percent this year to about 8 percent next year. The recovery will be mainly driven by some cynical recovery as well as government policies," UBS China economist Wang Tao said.

She expected government policy support, which has been in place since the spring of this year, will continue to play its role. That is reflected by increasing infrastructure spending, which has been supported by increasing credit into the economy.

As the government think tank, the Chinese Academy of Social Sciences (CASS) also predicted that the growth of the world's second largest economy would pick up in the next year.

In a blue paper issued by CASS last Wednesday, it expects the GDP to grow 8.2 percent and the CPI to reach 3.0 percent in 2013.

In order to buoy growth, "the Chinese government will make self-motivated efforts to slow down the rapidly expanding economy in the coming year," said Yi Xianrong, a finance researcher with the Chinese Academy of Social Sciences.

Chinese authorities will put "enhancing quality and efficiency of economic growth at the center" next year, and deepen reform and opening-up, as well as step up efforts to pursue growth driven by innovation, said a statement issued after a meeting of the Political Bureau of the CPC Central Committee last Tuesday.

More efforts are needed to improve macroeconomic control, boost domestic demand, adjust the economic structure, improve people's livelihoods, and add vitality to the economic development, the statement noted.

CONTROL ON PROPERTY SECTOR WON'T BE RELAXED

The average new home price in 100 major Chinese cities reached 8,791 yuan (1,397 U.S. dollars) per square meter in November, up 0.26 percent from October, data released by the China Index Academy showed last Monday.

The growth rate, up from 0.17 percent in October, marked the sixth consecutive month of month-on-month recovery, the private housing research institution said.

The recent rebound in the market shows that "demand continues to be strong" among homebuyers who buy residences for their own use rather than as investments, said Zhang Lei, an analyst with real estate brokerage firm Century 21st Property.

However, although the statistics signaled a warming real estate market, "Chinese government won't loosen the property market control in the near future," said Yu Yongding, a researcher with the Institute of World Economics and Politics (IWEP) at the Chinese Academy of Social Sciences.

China's real estate policies are likely to remain stringent in the coming five to 10 years, according to a research paper released in November by the China Index Academy.

Curbing housing purchases for investment purchases will continue to be the policy's chief priority. That end will be pursued by restricting the number of houses that can be purchased and continuing to offer slightly reduced mortgage rates to first-time homebuyers in the short run, the report said.

Despite the tight real estate policies, the pace of urbanization and the gradual improvement in residents' incomes in China will still help the industry to develop soundly in the coming decade, it said.

The Chinese government has repeatedly reiterated its firm stance on property market control and vowed to maintain tightening measures like bans on third-home purchases and property tax trials, which have been introduced in succession since 2010.

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