China forecasts first-half economic growth to exceed 9 percent

SHANGHAI, China (AP) _ Despite efforts to cool off China's surging economy, it is expected to grow an annual rate of more than 9 percent in the first half of the year, well above the official target,

Friday, May 21st 2004, 6:07 am

By: News On 6

SHANGHAI, China (AP) _ Despite efforts to cool off China's surging economy, it is expected to grow an annual rate of more than 9 percent in the first half of the year, well above the official target, the Commerce Ministry said Friday.

The estimate could heighten fears that roaring growth will fuel inflation and cause problems for banks. The government had hoped to hold the rate to 7 percent this year.

China's economic boom has given it an insatiable thirst for oil that has helped push up global oil prices to record levels.

But economists warn that Beijing's efforts to engineer a slowdown must be handled carefully to avoid hurting economies in Asia that depend heavily on trade with the emerging powerhouse.

China's gross domestic product grew 9.1 percent in 2003, and 9.8 percent iin the first quarter of this year, leading Chinese leaders to tighten credit and impose other restraints.

Growth for the rest of 2004 ``will still maintain a relatively fast pace,'' the ministry Web site said.

It forecast slightly lower growth in the second half of the year.

Authorities are trying to discourage investments in construction and some other industries that they say are aggravating inflation.

The report said China's overseas trade was likely to slow significantly in 2004. Exports are forecast to rise 15 percent, down from 35 percent growth in 2003. Imports are expected to rise 20 percent, down from a 40 percent increase in 2003.

That would leave a trade surplus for the year of about $10 billion, down from $25.5 billion in 2003.

China recorded a trade deficit of $10.8 billion in the first four months of the year, partly due to higher prices for imported oil and other commodities.

Efforts to slow the economy began showing results in April, with lower growth in investments in construction, factory equipment and other fixed assets, a senior Finance Ministry official said.

Such investments in April rose at an annual rate of 34.7 percent, down from a 43.5 percent increase in March, Vice Finance Minister Lou Jiwei said at a financial conference in Beijing.

But more may be done later to curb bank lending, Lou said.

``If monetary policy produces results fairly slowly ... we may need to adopt more vigorous efforts, Lou said.