China: Expecting 9.5% GDP in 2010

Reuters reported today that the State Council Development Research Centre (SCDRC),a leading state think-tank, has said that China’s economy would remain robust, as market-driven investment picked up while government-led stimulus spending slowed.They predict China’s economy to grow 9.5 per cent in 2010, topping 2009's expected figure, as real estate investment buoys growth and inflation remains mild.

“In 2010 the external (economic) environment will remain quite grim, but it will not deteriorate any further,” said the Centre’s report, which was published in the Chinese-language China Economic Times.

“Against a backdrop of ample production and supplies, we forecast that in 2010 there will not be marked inflation,” it said, adding that the CPI inflation index was likely to stay less than 3 percent for 2010.

The report adds to recent signs that Chinese officials and many experts are guardedly confident the country’s economy can maintain momentum in 2010, surmounting worries about inflation, investment policy and a heady housing market.

The country’s 4 trillion yuan stimulus package, complemented by a record surge in bank lending, propelled the economy to 8.9 per cent year-on-year growth in the third quarter of 2009.

While the government stimulus spending will fall off this year, investment in real estate could grow by 30 to 40 percent compared with 2009, and “become a main force driving investment growth,” said the new report, written by Zhang Liqun, a macro-economist in the Centre, which advises the government.

China’s manufacturing sector steamed ahead in December with rises in new orders and output driving the purchasing managers’ index (PMI) to 56.6 in December from 55.2 in the previous month, pushing the key indicator to a 20-month high.

Some cities in China have seen residential property prices rise by about a third this year, and real estate investment in China accelerated in November, up 17.8 percent for the first 11 months of 2009 compared with the same months in 2008.

Zhang said investment in real estate would remain strong, even as growing supply of new housing cooled price rises, especially from later in 2010.