WB: China economy to grow 10.4% in 2006   (Xinhua)  Updated: 2006-08-15 14:01  
BEIJING -- The World Bank said Tuesday China's economy is expected to grow 
10.4 percent this year and 9.3 percent in 2007. 
 Although China's gross domestic product expanded by 10.9 percent in the first 
half of the year, implying second quarter growth of 11.3 percent, a pace not 
seen since 1996, the outlook for the country's economy remains "favorable", 
prompting no need for overheating worries, the bank said in a quarterly report 
released in Beijing. 
 With production capacity continuing to expand in line with demand, inflation 
low and the current account in surplus, the main policy concern is not general 
overheating for now. In the long term, however, the continued investment boom 
warrants concerns about efficiency and makes more moderate growth desirable, 
explained the report. 
 The Bank has projected a mild slowdown in exports and fixed assets investment 
for the second half, which would imply a slight fall in GDP growth to under 10 
percent at the end of the year, resulting in growth of 10.4 percent for the year 
as a whole. 
 Bert Hofman, the bank's Lead Economist for China, stressed that the country's 
investment has been increasingly driven by firm's profits and profitability 
rather than administrative agendas. 
 For instance, sectors like transport equipment, ordinary machinery, and the 
textile industry which were identified by China's National Development and 
Reform Commission as having seen particularly rapid fixed assets investment 
growth, saw particularly high profit growth. 
 The only exceptions, he said, were large sectors outside of core 
manufacturing where government policies including on pricing have a large 
influence. 
 Another noticeable point is that investment growth tended to be higher in 
sectors dominated by the private sector, said the report.  
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