Chinese Mandarin - Asset prices may keep rising in 2nd half

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BIZCHINA / Center

Asset prices may keep rising in 2nd half

By Du Xiaoli (chinadaily.com.cn)
Updated: 2007-08-06 16:59

China's asset prices are likely to continue rising in the second half,
said Fan Jianping, director of the economic prediction department under
the State Information Center, at a forum on financial investment.

Although the stock market will not surge as much as it did in the first
half of the year, it may reach continuously new records and accumulate
increasing risk. Economic growth in the second half is predicted to be
slightly lower than the first half as the GDP growth reaches 11.3 percent
for all of 2007.

China's current price hike is not cost-push inflation due to rising wages
and the country should attach greater significance to the difficult
problem of inflation in the form of asset price bubbles, said Fan. Real
estate prices will probably also keep increasing in the second half, he
said.

Related readings:
?Property investment up 28.5% in 1st half
?Beijing average housing prices up 1,000 yuan since May
?New fund investors outnumber stock investors
?Top leadership warns on overheated economy

Fan believes the trend toward overheating is more obvious and that this
year's economic growth will be slightly higher than last year. China's
economy will still be on the climbing period in this round of economy
cycle, he said.

China's CPI growth will not reach 5.5 percent definitely this year, noted
Fan. "The whole year's price level will be within the controllable range
and there is no need to launch stricter price control policies."

Fixed assets investment maintained a high level in the past six years and
the growth rate of fixed assets will keep growing quickly in the second
half, according to analysis of combined factors such as loan interest
rate and return on investment.

Growth of consumption is accelerated following increased income and
improved psychological anticipation for urban and rural residents, Fan
said. It is predicted that the growth of total consumption this year will
be higher than that of last year.

Fan also predicted that growth in China's foreign trade surplus will slow
down in the second half as the effect of exchange rate and tax rebate
policies gradually emerge. Rapidly improving international
competitiveness of Chinese enterprises is an important reason for the
country's expanding foreign trade surplus.

(For more biz stories, please visit Industry Updates)

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