News Analysis: Chinese economy where to go post-Olympics (2)

　　CHALLENGES REMAIN

However, economists were still concerned of the "post-Games effect," because investment would inevitably drop and consumption that had come along with domestic and overseas tourists would decrease or even come to zero after the Games.

The impact could combine with other uncertainties such as the global slowdown and slack export demands to complicate the prospects of the economy; it was already under huge pressure of slower growth and economic restructuring, said Wang Yiming, a National Development and Reform Commission economist.

In the first half, the national economy expanded 10.4 percent -- 10.6 percent in the first quarter and 10.1 percent in the second. The world''s fourth largest economy was on a track of slowing since the third quarter of last year registered 11.5 percent.

Meanwhile, the country''s inflation rate eased to 6.3 percent in July from 7.1 percent in June, 7.7 percent in May and a peak of 8.7 percent in February. This was due to a series of measures including tightening monetary policies to rein in runaway prices.

But the country''s decision makers are now in a dilemma of trying to seek a balance between fighting inflation and boosting economic growth in the rest of the year to ensure a steady and fast economic development.

Individual investors, who looked to stock and real estate markets to feel the pulse of the economy, were discouraged during the Olympics.

The country''s stock market failed to live up to wide expectations of a bullish run, and reported a more than 15 percent decline in nearly a month before and after the Olympics.

Wang said the performance of the market was not directly linked to the Olympics. He believed share prices would go towards a more reasonable range as investor confidence returned on the back of a strong economy and steady profits revealed in the half-year reports of listed companies.

Property prices, which had been soaring since early 2001, seemed to have had come to a standstill since the end of last year. Many feared there could be a drastic fall in prices post-Olympics.

Olympic researcher Chen said the property market was affected by the Games as it had boosted Beijing housing prices.

He also believed the national market enjoyed good prospects in the long run. "More people will move into cities and create new demands, as the country''s urbanization is below the world average."

STEADY GROWTH ANTICIPATED

Despite the challenges, economists agreed on the future prospects of the Chinese economy.

It would maintain a steady growth this year, economist Wang said. "The overheating risks that once threatened the Chinese economy had been pared following the country''s macro-control measures; three major drivers of growth -- investment, consumption and exports -- would maintain a good momentum."

"The national economy is now on a normal track as overheating risks recede," said Fan Gang, a member of the Monetary Policy Committee under the People''s Bank of China, the country''s central bank.

"Risks of a sudden and drastic fall-off on the stock and real estate markets had already been largely reduced and energy prices had been adjusted. There is not much to worry about the economy after the Games."

Analysts said China was expected to maintain a seven to eight percent growth, or even higher, for at least 15 to 20 years. They made the prediction on robust investment, great potential for further development and proper macro controls.

Source:Xinhua