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Li builds case for urbanization

Updated: 2012-12-21 01:16
By Chen Jia ( China Daily)

Setting a lower target also reflects government confidence in pushing for reforms while maintaining still-robust growth, said Xu Hongcai, economist with the China Center for International Economic Exchanges, a government think tank.

Other analysts from financial institutions, including JPMorgan, Bank of China and Nomura Securities, also forecast growth above 7.5 percent next year.

In the meantime, "larger investment, both private and public, will be welcomed by the government in the development of urban infrastructure and the social security system", Xu said. "Improvements in the financial system will also help cut down the downside risks in 2013."

The government will offer tax cuts and help small enterprises and companies in the service sector, according to Xu.

Xu said he is also looking forward to massive investment in urban rail systems, telecom and subsidized housing projects for low-income households.

But the investment blitz should be tempered to avoid excessive production, as inflation may rebound in the coming months, he added.

Some economists predict that the 2013 consumer price index, a main gauge of inflation, will be around 3.5 percent.

Xu said he will not rule out the possibility of a 4 percent inflation rate.

"The CPI may rise faster in the second half of next year," he warned, saying an easy credit supply from the US Federal Reserve will probably drive up global commodity prices and cause capital inflow into emerging-market countries.

A recent report from the Fitch ratings agency said it is inevitable that more reform measures will be launched in China in 2013 to facilitate the economic "rebalancing".

Contact the writer at chenjia1@chinadaily.com.cn

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