BOAO, China, April 2 China's economy is on track
to grow between 8 and 9 percent this year, with a more moderate
pace of expansion helping to contain inflation, Fan Gang, an
influential Chinese economist and former central bank adviser,
said on Monday.
A spate of recent Chinese data has fanned market fears of a
sharp slowdown in the world's second-largest economy, but Fan,
who heads the National Economic Research Institute, a
Beijing-based think-tank, said the economy is in track for a
"I would like to argue growth between 8 percent and 9
percent is not low growth but normal growth, that will create
jobs without creating inflation," he told the 2012 Boao Forum on
the southern Chinese island of Hainan.
"It's a soft landing and growth may slow ... say, between
8.3 percent to 8.5 percent," he said.
Fan said China still needs relatively fast growth, driven by
continued industrialisation and urbanisation to help absorb more
people moving from rural areas into cities.
China has cut its annual growth target to 7.5 percent this
year, a pace the government hopes will give it room to push
Analysts broadly expect the growth target to be exceeded and
few expect a hard landing. The economy grew 9.2 percent in 2011.
Annual economic growth is widely seen slowing to just over 8
percent in the first quarter of 2012. Inflation dipped to a
20-month low of 3.2 percent in February, but Chinese leaders
have warned against possible risks from rising global oil
China's labour shortages have fanned a debate among
academics about whether the country is near or crossing the
Lewis turning point, a theory that wages in a developing nation
start surging once there is a shortage in surplus rural labour.
Just over 51 percent of the 1.35 billion mainland Chinese
lived in towns and cities at the end of 2011, the government has
said, crossing the halfway mark after three decades of rapid
growth in the world's most populous nation.
But Fan said he believes China has yet to reach the
demographic turning point as only 30-35 percent of the
population still relies on farming as their source of income.
China's slowdown is led by the country's richer coastal
provinces, but the inland provinces are catching up as many
companies are moving to the interior to cut costs, he said.
That partly explains why there has been a labour shortage in
coastal areas, China's traditional export hubs, he added.
The government needs to improve the business environment for
Chinese manufacturers to prevent them from moving to foreign
countries, a shift could undermine employment, he said.
Data at the weekend showed China's big factories were
surprisingly busy in March as a stream of new orders lifted
activity to an 11-month high, but credit-constrained smaller
manufacturers struggled, suggesting that the economy is still
The pickup in production at large factories was attributed to
an expected bump as winter ends, and economists cautioned not to
read too much into the stronger-than-expected figure.
That left intact a view that China's economy, while not
crashing, likely suffered its worst quarter in three years
between January and March, and requires at least some monetary
policy easing this year to ensure the cool down stays mild.