International | Oct 30 2006
By Chris Shaw
As China continues to introduce new measures designed to slow its rate of economic growth more and more forecasters are expecting the new measures to prove successful, With Lehman Brothers the latest to scale down estimates of GDP growth.
The broker notes growth in the September quarter fell to 10.4% from 11.3% in the June quarter and it expects this lower rate of growth will prevail for the full year against a year-to-date increase of 10.7%. Next year the broker expects a continuation of the trend, as it sees GDP growth declining to 9.6%.
The broker’s revised forecast suggests while the end result will be a slowing in the growth rate it won’t be due to the new measures being introduced to restrict growth in investment as they appear to be having little impact. Rather, the broker sees the slowdown as the result of a fall in total exports, which is likely to reflect a slowdown in the US economy.
At the same time the broker has not adjusted its expectations for investment, highlighting the difficulties the Chinese authorities are having in bringing this sector of the economy under control. Figures show fixed asset investment over the first nine months of the year increased by 27% from the same period last year to total US$910bn.
The China Academy of Social Science (CASS) is forecasting total growth in fixed asset investment this year of 24.8%, slowing slightly to growth of 20.4% next year. The CASS estimates economic growth next year will be around 10%, while average growth forecasts are closer to the Lehman Brothers estimate of 9.5%.
