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BEIJING: China's economy could grow by over 10 per cent in the fourth quarter of 2009 spurred by massive investment and rising consumption, the state press said Sunday, citing a top government think tank.
"The economy is benefiting from fast-paced investment, record levels of consumption, rising exports to international markets and the stable resumption of industrial growth," China News Service cited Yu Bin, a top economist at the cabinet's State Council Developmental Research Centre, as saying.
Yu told a symposium that China's economy would witness growth of more than 10 per cent year-on-year in the last three months of 2009, with full year growth of around 8.5 per cent, the report said.
China could also maintain double-digit growth next year, Yu said, but the economy faced several challenges, including inflation linked to a vigorous government stimulus package and the appreciation of the yuan.
"If the Chinese yuan appreciates too fast, the huge numbers of export industries will suffer," Yu said.
"But a small appreciation will attract more capital inflows and speculation over the yuan could bring instability to financial markets. China is facing these two difficulties."
The government must also adequately stabilise real estate markets that were responsible for a significant portion of the nation's growth this year and which have gobbled up nearly one fourth of investment in 2009, he said.
In the coming year, the government should continue to pump-prime the economy to ensure that consumption and investment did not sharply fall off, he added.
Earlier this month, the World Bank upgraded its 2009 growth forecast for China to 8.4 per cent on the back of huge public spending but said stronger domestic demand was needed to ensure a sustainable recovery.
China grew by 8.9 per cent in the third quarter - the fastest pace in a year - after expanding by 7.9 per cent in the second quarter and 6.1 percent in the first three months, the slowest pace in more than a decade.
- AFP/yb
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