China's economic expansion may slow to 8.7 percent this year because of government efforts to curb exports and fixed-asset investment, a state think-tank said.
Growth will slow from last year's 9.1 percent pace, Wang Tongsan, head of the technical and economic research center of China's Academy of Social Sciences, told delegates at a conference in Beijing on Saturday. Higher grain prices may push up inflation and farm incomes, Wang added.
"China will continue to have a good grasp of macroeconomic controls and will continue to implement a positive fiscal policy and stable monetary policy," Wang said. "Higher grain prices are one of the main reasons for the recent rise in prices and incomes."
Central Bank Governor Zhou Xiaochuan (
The commerce ministry last month predicted growth would slow to about 8.5 percent in the three months ending March 31 from a 9.9 percent pace in the previous quarter.
"You have to keep the 7 percent growth target in context, remembering that it was the same target last year, when growth came in at more than 9 percent," said Andrew Rothman, CLSA Emerging Markets' Shanghai-based analyst. "The government wants to maintain a high level of growth, but cut back on the number of dumb investments being made at the local level."
"China has two priorities now: Urban job creation and boosting income, so it would be crazy to want to slow growth," he said.
Consumer prices may rise 3.5 percent this year, compared with inflation of 3.2 percent at the end of last year. Disposable incomes are likely to rise an average 9.1 percent, Wang said.
Premier Wen Jiabao (溫家寶) said in a March 5 report to the National People's Congress that the government will block investment it deems "haphazard" or "redundant."
The government previously said it would limit investment in the steel, cement and aluminum industries to head off possible gluts and reduce power shortages. Wen also said he wants to stem a growing disparity between urban and rural incomes.
The government will release enough grain from its reserves to limit wheat and rice price increases to 20 percent this year and corn price increases to 10 percent, Wu Baosen, an official from the State Development and Reform Commission's price forecast center, said at the conference. Shortages caused grain prices to rise as much as 40 percent in the first two months this year.
"Recent price increases for grain represent a recovery trend in the market," Wu said. "There's also concern for the well-being of urban residents, so the government won't allow price increases to get out of hand."
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