China quake rebuilding to boost GDP -paper
BEIJING, June 18 (Reuters) - Last month's massive earthquake in China will boost 2008 growth by a net 0.3 percentage points as reconstruction outweighs the short-term disruption to production, a government think-tank said on Wednesday.
Economic losses from the May 12 earthquake, which killed more than 70,000 people, could end up totalling 400 billion yuan ($58 billion) to 500 billion yuan, according to the State Information Centre, a research body for the top economic planning agency.
"The quake is likely to slow GDP growth this year by 0.1 percentage point. But rebuilding will push up the pace of GDP by 0.4 percentage points," it said in a research note published in the official China Securities Journal.
"So overall, the growth rate will go up by 0.3 percentage points," it added. China's GDP expanded 11.9 percent in 2007.
The think-tank said the disaster had not changed China's economic fundamentals. But it said the quake would increase pressure on the government to control prices and might tighten the supply of migrant workers.
China's annual consumer inflation ebbed to 7.7 percent in May from a 12-year high of 8.7 percent in February. But economists worry that price pressures are still building in the pipeline.
With rising labour costs and talk that China will liberalise domestic energy prices now that oil is above $130 a barrel in global markets, producers are under strain to pass on their costs, Zhu Baoliang, the think-tank's chief economist, said.
Writing separately in the same paper, Zhu suggested that the central bank tackle inflation by speeding up the yuan's appreciation, which would make imports cheaper.
He dismissed concerns that a stronger yuan might suck in more speculative capital, making it harder to control liquidity.
"Now is a fairly good time to speed up the yuan's rise. Currently our stock market is dropping and the property market is sluggish. Quicker yuan appreciation should not bring in a large flood of hot money," he said.
Still, Zhu said the yuan's rise should not be too fast. (Reporting by Eadie Chen; Editing by Alan Wheatley and Keiron Henderson) (eadie.chen@reuters.com; +8610 6627 1268; Reuters Messaging: eadie.chen.reuters.com@reuters.net)) ($1=6.891 Yuan) ($1=6.891 Yuan)
Economic losses from the May 12 earthquake, which killed more than 70,000 people, could end up totalling 400 billion yuan ($58 billion) to 500 billion yuan, according to the State Information Centre, a research body for the top economic planning agency.
"The quake is likely to slow GDP growth this year by 0.1 percentage point. But rebuilding will push up the pace of GDP by 0.4 percentage points," it said in a research note published in the official China Securities Journal.
"So overall, the growth rate will go up by 0.3 percentage points," it added. China's GDP expanded 11.9 percent in 2007.
The think-tank said the disaster had not changed China's economic fundamentals. But it said the quake would increase pressure on the government to control prices and might tighten the supply of migrant workers.
China's annual consumer inflation ebbed to 7.7 percent in May from a 12-year high of 8.7 percent in February. But economists worry that price pressures are still building in the pipeline.
With rising labour costs and talk that China will liberalise domestic energy prices now that oil is above $130 a barrel in global markets, producers are under strain to pass on their costs, Zhu Baoliang, the think-tank's chief economist, said.
Writing separately in the same paper, Zhu suggested that the central bank tackle inflation by speeding up the yuan's appreciation, which would make imports cheaper.
He dismissed concerns that a stronger yuan might suck in more speculative capital, making it harder to control liquidity.
"Now is a fairly good time to speed up the yuan's rise. Currently our stock market is dropping and the property market is sluggish. Quicker yuan appreciation should not bring in a large flood of hot money," he said.
Still, Zhu said the yuan's rise should not be too fast. (Reporting by Eadie Chen; Editing by Alan Wheatley and Keiron Henderson) (eadie.chen@reuters.com; +8610 6627 1268; Reuters Messaging: eadie.chen.reuters.com@reuters.net)) ($1=6.891 Yuan) ($1=6.891 Yuan)
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