China GDP May Exp 10% in 2009, State Analyst Says

    Nov. 30 (Bloomberg) -- China's economy may grow 10 percent next year as the "huge" potential of domestic consumption??investments counters the impact of a global slowdown, a State Council researcher said.



The "vast development potential" of the world's most- populous nation will ensure a fast rate of expansion in 2009, said Zhang Liqun, a researcher with the Cabinet's Development Research Center, according to the official Xinhua News Agency. "Domestic enterprises need to accelerate the pace in upgrading their business structures to better cope with a severe world economic situation."



China last week cut its benchmark interest rate by the most in 11 years??has unveiled a 4 trillion yuan ($586 billion) stimulus plan to protect the economy??a global recession. Zhang's optimism isn't shared by the World Bank, which on Nov. 25 said the Chinese economy is expected to exp next year at the slowest pace in almost two decades.



"We expect growth more likely to be at a rate of between 8 percent??9 percent," Fan Jianping, chief economist at China's State Information Center, said by phone??Beijing today. "The stimulus package could contribute 1 to 2 percentage points, but the overall trend will be a down arrow."



Consumer prices in China may increase by 3 percent in 2009, compared with 7 percent in the first nine months of this year, Zhang said in the Xinhua report.



Global Recession



China' central bank lowered its key lending rate by 108 basis points to "ensure sufficient liquidity in the banking system??to promote steady loan growth so that monetary policy can play an active role in supporting economic growth," the People's Bank of China said last week. A basis point is 0.01 percentage point.



China can help cushion the global recession by stoking its own expansion, President Hu Jintao told Group of 20 nation leaders in Washington on Nov. 15.



The World Bank cut its forecast f China's economic growth next year to 7.5 percent??9.2 percent previously. The Organization f Economic Cooperation??Development also lowered its forecast.



China's economy grew 9 percent, the weakest pace in five years, in the third quarter, slowing??11.9 percent last year. The slowdown is deepening, after export orders fell last month to the lowest level since 2005??property price slid.



The country's cabinet said Nov. 26 it was studying extra measures to help struggling companies in the steel, auto, petrochemical??textile industries??to increase key commodity reserves?? to exp insurance f the jobless.



"The government probably has little choice if it is to follow through on its ambitious plan to revive the economy," said Mark Williams, an economist at Capital Economics in London. "Beijing has at least signaled its willingness to use fiscal policy to support demand, but so far it has not been convincingly delivered."



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