MercoPress. South Atlantic News Agency

China forecasts 11% industrial expansion and 8% for GDP in 2010

Beijing officials however warned about “blind” optimism since the recovery is still waiting for the private sector to respond

China's industrial output is expected to post an annual 11% increase in 2009 and in 2010 buoyed by the government's stimulus packages, Minister of Industry and Information Technology (MIIT) Li Yizhong said Monday. He added that industrial performance would ensure GDP growth of 8% as planned for this year and the next.

Industrial output moved into double-digit growth in June, up from the 3.8% in the first two months of the year. The first 11 months saw the rise at 10.3% from a year ago, Li said during a two-day business conference in Beijing.

“The recovery base has been gradually consolidated and the macro economic policies will still be in place to boost the economy next year” Li anticipated, and forecasted a similar 11% growth for industrial output in 2010.

“The growth pace is necessary, achievable and appropriate. We will not set the target too high”, he added. However, he warned against “blind optimism” as the industrial recovery was “mainly supported by government investment and bank loans rather than private investment, which posed challenges”.

Also at the meeting, Vice-Premier Zhang Dejiang said that industrial “rebalance” would be top of next year's agenda, and a stable and “a relatively fast industrial development can and must be maintained”.

Both Zhang and Li said excess industrial capacity was still a problem for China’s economy especially when global demand was yet to recover from the financial crisis. “We are determined to curb excessive capacity in some sectors and redundant construction projects; obsolete capacity should be phased out” said Zhang.

The top officials said the government would push forward mergers and acquisitions in the industrial sectors to increase consolidation and revealed “a guidance plan for mergers and acquisitions for the steel, non-ferrous metal, construction material, automobile and shipbuilding industries.

Beijing will lift the threshold of market entry for some sectors including steel, cement, flat glasses and coal chemical industries to improve energy consumption efficiency and environmental protection, added Li. However in the next three years there will be an intense monitoring of management and decision making in the shipbuilding industry, aluminium and certain steel sectors.

In related news the Ministry of Agriculture, MOA, said that China’s grain harvest is expected to top 500 million tons for the third consecutive year in 2009. The increase was based mainly in an expansion of the area planted which added 2.27 million hectares for this harvest, the biggest jump since 2006.

Ye Zhenqin, MOA director of the Planting Industry Management Department said oilseed output would increase by 3% while cotton will drop an estimated 10%, hit by unprecedented natural disasters.

According to Ye Zhengin the increased crop should represent a considerable increase in the per capita income for farmer families in China.