China's economy will see a temporary and only moderate slowdown next year before returning to speedy growth in 2008, the Organisation of Economic Cooperation and Development said Tuesday.
Slackening export growth and domestic policy tightening means an ongoing slight easing in economic activity will extend into the first half of next year, the OECD forecast in its twice-yearly "Economic Outlook" report. "Thereafter, growth may pick up again, resulting in the economy growing in line with potential of somewhat more than 10 percent by 2008," it said.
The OECD said it expected growth in the world's fourth-largest economy to reach 10.6 percent this year, followed by 10.3 percent in 2007 and 10.7 percent in 2008.
China's rapid growth has ramifications far beyond its borders, with the world's most populous nation leading expansion in Asia, and Chinese demand pushing up prices of raw materials, it said.
"Leading indicators of activity from purchasing managers suggest that underlying demand may remain buoyant so that overall growth should not fall much below potential," it said. Investment, financed not just by bank loans but also by re-invested earnings, is continuing to rise as a share of China's overall economy, according to the report.
This is boosting the nation's capital stock and pushing its potential growth to "somewhat more than 10 percent" a year, it said. China's economy grew 10.7 percent in the nine months to September.
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