China economy to remain strong for 2008-09

China economy to remain strong for 2008-09 - ADB

(Xinhua)
Updated: 2008-09-16 15:02

Fixed investment growth in real terms dropped around 15 percent in the first 6 months of 2008, down from the robust 22 percent in 2007 due to rising prices for fuel, power, and raw materials; reduced growth in industrial profits; a slowdown in the property market owing to a tightening of credit and government directives to reduce fixed investment in certain heavy industrial fields.

ADB said it has also revised the inflation projection for the whole year of 2008 from 5.5 percent to 7 percent on the back of high food prices.

For 2009, the inflation is likely to hit 5.5 percent, instead of 5.0 percent projected in April. Price increases for fuel and electricity are anticipated, which will lead to higher production costs that may be passed onto consumers, the report said.

The report said the "main risks to the outlook" would be a sharper than expected deceleration in exports and double-digit inflation that would require aggressive monetary policy tightening in the coming months.

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