China's gross domestic product growth is likely to slow to 8 to 9 percent in 2009, mainly due to slowing export growth, a senior government economist said in remarks published on Monday.

Eugene Hoshiko / AP

The export sector troubles will also contribute to a combined loss of about 25 million jobs in the two years 2008 and 2009, said Fan Jianping, chief economist of the State Information Centre, a top government think-tank.

Fan's expectation for 2009 compared with his organisation's forecast of 9.3 percent growth in China's GDP in 2008, made in late November, from 11.9 percent in 2007.

"Once an economy has established a downtrend, the cooling in the economic growth will last for a period of time," Fan said in an interview with the official Shanghai Securities News.

"It is forecast that our country's economy will slow further in 2009 from 2008," Fan said. "But government policies to expand domestic consumption will partly offset the negative impact of the slowdown in export growth, so it is still very hopeful that China's GDP could grow between 8 and 9 percent in 2009."

Fan recommended the government ensure the quality of new investments and particularly promote infrastructure projects in rural areas.

Beijing can take advantage of the plunge in global commodity prices to build up its own resources and increase its pricing power in global resource markets.

It should also try hard to turn more of China's roughly $1.9 trillion in foreign exchange reserves into strategic resources such as oil and minerals and help guarantee China's long-term supply of resources, Fan told the Shanghai Securities News.

Separately, Li Yang, a researcher with the Chinese Academy of Social Sciences (CASS), said China's GDP may rise 9 percent in 2009 thanks to massive investments.

"It takes time for China to get back all the economic growth steam, but the slowdown may end in the second half of 2009," Li said in comments on the official China Securities Journal.

Li added that China would keep its yuan stable against the dollar.

He said it is in China's best interest to keep the yuan pegged to the dollar as well as a trade-weighted basket of currencies.

Yu Yongding, another CASS researcher and a former member with the monetary policy committee of the central bank, said China should reduce holdings of U.S. treasuries in its foreign exchange reserves.

"We should sell part of U.S. treasuries to increase holdings of euro and yen assets," Yu said in comments published on the official paper. "Market demand for U.S. treasuries is strong now, but the situation could be very different if the U.S. government issues debts massively in 2009," he added.

Tools:

Print Email