| China growth estimate raised at World Bank |
SHANGHAI, May 30 -- The World Bank raised its estimate for China's economic growth in 2007, citing surging exports to Europe and the nation's low interest rates.
The world's fourth-largest economy may grow 10.4 percent this year, the World Bank said in its quarterly update today, up from a November forecast for 9.6 percent growth, according to Bloomberg.
"The international environment remains largely favorable," Bert Hofman, chief China economist at the World Bank in Beijing, said in the report. "With China's export prospects improved, and a policy stance that is less tight than expected, the World Bank revised its forecast for GDP growth."
Hofman said China's asset market valuations "strengthen the case for tighter monetary policy and higher interest rates to tie up liquidity in bank deposits."
China's benchmark CSI 300 Stock Index has more than doubled this year, its gain partly fueled as households channeled savings from deposits into equities. The central bank's benchmark one-year deposit rate, a ceiling for deposit rates commercial banks can offer, is 3.06 percent, little more than the nation's 3 percent inflation rate.
"In turn, the need for a tighter monetary policy has strengthened the case for more rapid yuan appreciation," Hofman said.
The CSI 300 Index dropped as much as 6.5 percent today after the government tripled the tax on securities transactions.
The World Bank also raised its estimate for China's inflation this year to 3.2 percent, up from February prediction of 2.5 percent and Chinese central bank's target of 3 percent. Consumer prices picked up from last year's 1.5 percent because of rising international food prices, the lender said.
|
|
