On the 6th Steel Development Strategy and Supply/ Demand Forum hosted by Chinese steel information source SteelHome last weekend, Mr.Zhang Liqun, from Development & Research Center of China State Council, delivered a speech named Analysis on Chinese Macro Economic Development in 2010.

Q 1' s 11.9% Growth Rate in China's Economy: Not Over-heating

National Bureau of Statistics reported a year-on-year 11.9 percent growth rate in China 's Q1 economy. The figure underlined the rapid recovery amid global economic crisis but raised fresh questions about the risks of overheating. However, Mr.Zhang Liquan believed the rate was reasonable and acceptable, citing that the growth rate one year earlier was too low and Q 1' s exports recovery performed robust which helped a lot in stimulating economic growth.  

CPI: China 's Consumer Price Index (CPI), a main gauge of inflation, increased by 2.2 percent in the first quarter from the previous year, hinting that inflation remains mild.

Money supply: Chinese government's efforts to control money supply have worked obviously. The supply capacity of commodities performs strong. Zhang predicted that the price of commodities will not pick up sharply.

He highlighted that the heady housing market may be a headache amid economic development. The government should work hard to restrict demand in short term so as to stabilize house price as a building can be finished in 1.5-2 years, and to increase the housing in long term.

 Zhang Liqun, Researcher, Development & Research Center of China State Council

China’s Economy Hasn't Entered Sustainable Growth Times

Q 1' s economic growth rate reflected good performance in China 's economic development, but Zhang is not optimistic over China 's economic growth in long term, “The bedrock of underpinning China economic growth is not stable.”

Since H2 2009, US's economic was jacked up by government stimulus spending and end users' purchasing activity, instead of market consumption. In other words, US's economic development is not stable and may experience volatilization again, which will drag down China 's exports.

China domestic demand's growth in Q1 was government-supported, not market-driven. The pedestal of auto and housing market demand is not stable and market investment performs wild. When government winded down the stimulus spending in Q1, the investment dropped obviously.

China’s Economy to up Around 9.5% in 2010

In 2010 report on the government's work, China 's GDP is designed to rise by 8 percent and CPI to rise by less that 3 percent. Zhang said that Chinese government should not only prevent economic over-rapid growth but also keep vigilant about market's cooling trend.

China’s short-term micro control should be aimed at stabilizing demand, especially harmonizing the relation between investment and export. In medium and long term, China should insist on sustainable development, speed up to restructure economy and to transform economic development mode, enhance the economic growth's quality & benefit, and reduce pollutant.

He made following prediction for 2010: it is not hard for China's exports to maintain 10 percent growth rate; government's stimulus policy will weaken gradually, China's fixed assets investment growth will slide by 10 percent to around 20 percent; the consumption is likely to sustain the level of 2009, and CPI is anticipated to grow up less than 3 percent.

To sum up, China 's economy will rise by around 9.5 percent in 2010.