Singapore (Platts)--25Mar2008

A decline in exports, notably affected by the US credit crunch, is likely
to drag China's economic growth down to 10.5% this year, though still above
the official target of 8%, according to a leading university research paper,
the Xinhua news agency reported Tuesday.
     China's booming exports are likely to see a sharp decline, which will
tame the 11.4% growth in gross domestic product last year to a slower 10.5% in
2008, against the backdrop of the subprime mortgage crisis and calming global
economy, a paper released by the Economic Research Institute of Renmin
University said.
     The tempered figure, however, still beats the official target of 8%
despite the government's measures to cool the economy, the report said.
     The economic overheating showed signs easing after GDP peaked at 11.4%
last year, the Deputy Dean of the Economic School of Renmin University, Liu
Fengliang, said.
     The opinion was echoed by Guo Qingwang, Dean of School of Finance in the
university, who reckoned the GDP will grow less than 11.5% in the coming two
years.
     The paper said inflationary pressures will remain a tricky problem for
the Chinese government, with the consumer price index hitting a near 12-year
high of 8.7% in February, and the continuous price rise in metal, crude oil,
and agriculture products.
     A 1% rise in the international energy price will lift China's CPI by
0.1%, the report said.
     China faces the potential risk of drastic economic fluctuation, while
tackling the biggest challenges of soaring prices and mounting inflationary
pressure, Premier Wen Jiabao said last Tuesday.
     Wen said his government will ensure rapid, yet stable, economic
development and at the same time effectively hold down inflation and address
problems of "unstable, uncoordinated and unsustainable" development.
     The report said the repercussions of slowing world economic growth and
the US credit crunch on China's capital market will add more uncertainty
to China's economic outlook this year.
     China's GDP has been expanding at a double-digit pace for five straight
years, peaking at 11.4% in 2007, the highest in the past 13 years.