China's economy will grow by 8.3 percent this year, slightly faster than the government's target of 8 percent, despite uncertainties about export demand, the government's top think-tank said on Monday. The forecast by the (CASS) is significantly more optimistic than those of the Organisation for Economic Co-operation and Development (OECD) and the World Bank, which see China growing this year by 6-7 percent and 6.5 percent, respectively.
"Basically, the target of GDP growth of 8 percent is achievable, although China's economy is still facing downward pressure," said Wang Tongsan, director of the Institute of Quantitative and Technical Economics at CASS. China's annual economic growth slowed to 6.1 percent in the first quarter, from 6.8 percent in the fourth quarter of 2008, but that reflected a pick-up in quarter-on-quarter growth, and March data offered more signs of a gradual recovery.
CASS's forecast is in line with the view of some officials and experts that China's economy is bottoming out, in part because of the impact from the 4 trillion yuan ($585 billion) stimulus package. Jia Kang, head of research at the Ministry of Finance, wrote in a commentary on Monday that the economy is bottoming, paving the way for needed reform of the resources tax.
Exports and imports are expected to drop by 3.0 and 2.4 percent this year, respectively, bringing the trade surplus to about $280 billion, slightly lower than in 2008, according to CASS's forecast published on Monday. But officials and experts also see a silver lining in the tough export environment.
"Although the absolute export volume is dropping, the market share of China's products in the markets of major trade partners has increased by 2 to 3 percent," said Zhou Hongwei, an official at the Department of National Economy, which is part of the National Development and Reform Commission, the top economic planner.
The blue book also cited the foreign exchange rate as an important tool to promote export growth, but it did not say explicitly whether the yuan, also known as the renminbi (RMB), needs to depreciate. "To adjust the RMB exchange rate is an important measure to relieve fiscal pressure and improve the competitiveness of export goods," the report said. "Therefore, we should boldly use the tool of foreign exchange rates to step up support for exports."