ADB upgrades China's GDP growth forecast

BEIJING: Buoyed by brisk rpt brisk exports, apart from strong investment and consumption, China's economy will grow by an impressive 11.2 per cent this year, up from an earlier estimate of 10 per cent, an Asian Development Bank (ADB) forecast said on Monday.

"The faster than expected growth momentum built up this year is expected to carry into 2008," says the Asian Development Outlook 2007 Update released here.

China's economy grew at a faster-than-expected 11.5 per cent in the first half of 2007. It expanded at 11.1 per cent lat year. The report forecasts growth of 10.8 per cent for 2008, also an upward revision from the 9.8 per cent projection in March.

"Further steps to cool the rapid investment expansion are likely and the Government will put more emphasis on improving energy efficiency and on cutting pollution. But top priorities remain the creation of jobs for nearly eight million rural surplus workers migrating to cities each year and on lifting income growth in lagging regions and areas," the report says.

The 11.5 per cent Gross Domestic Product (GDP) growth in the first half, its fastest rate since 1994, was led by industry, especially in such sectors as steel, electricity, chemicals, and oil processing.

Strong profitability, buoyant sales and still-low lending rates drove investment during the period, it said.

Investment administered by local governments grew by 28.1 per cent in the first six months, nearly double the equivalent central government rate, suggesting that efforts by the centre to tighten local investment have not had lasting effects.