China's economy is forecasted to expand two digits for the sixth consecutive year in a context of inflation, which was record in a decade in 2007, reported this week the Shanghai Securities News, quoting a government think-tank.
China's GDP is expected to grow 10.8% in 2008, compared to 11.5% in 2007, according to the government's Information Center. Inflation in 2008 is estimated in 4.5% after having reached 4.7% last year the highest in ten years added the Center which depends from the Nacional Committee for Development and Reform, the main economic planning office. The Center also advances that China's trade surplus, a permanent source of friction with United States and the European Union, will be less strong in 2008, because of the of "foreign protectionism", uncertainty about the performance of the US economy and the elimination and/or reduction of aid to the export industry. This year's trade surplus according to the Center's estimate is estimated in 328.4 billion US dollars, up 22.5% over 2007. The Center's data follows on information indicating that manufacturing in China during December picked up strongly from November which was the lowest in eight months. However activity indicators also show that inflation and profit margins are in a bind. With inflation of input prices growing faster than production inflation, profit margins suffer.