Growth of China's gross domestic product (GDP) is expected to slow from around 10.5 percent this year to 9.25 percent next year as a result of the government's macro-economic controls, according to a report released by a Chinese research institute.

The report, jointly completed by the Institute of Economics of Renmin University and China Chengxin Credit Management Co. Ltd, said after peaking this year, the growth of the country's GDP is expected to decline with implementation of more stringent macro-controls next year.

According to its estimates, China's GDP will grow by 10.48 percent this year, with investment in fixed assets up 27 percent, Consumer Price Index (CPI) up 1.5 percent, the M1 up 14.9 percent, the M2 up 17.2 percent, imports up 27.2 percent and exports up 23.4 percent.

China's GDP growth began to decline in the second half of this year, showing that the macro-economic control policies aiming to cool down the economy has taken effect and the trend is likely to continue next year, said the report.

The report predicted that China's investment in fixed assets will grow by 23 percent next year, 3.65 percentage points lower than the annual average from 2003 to 2006.

The decline in the growth of fixed asset investment may lead to weakness in investment-driven growth and cause some resources sectors to become idle, warned the report.

The report said a growth rate of fixed asset investment ranging from 25 to 27 percent is desirable.

According to the report, slowing the monetary supply and liquidity surplus in China's banking system will be major problems that need to be solved next year.

1

2

(For more biz stories, please visit Industry Updates)