China to Maintain Growth Momentum After 2008

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A government-run think-tank expressed optimism on the security of China's post-2008 economy following recent fears of an economic depression after the Beijing Olympics. Chen Dongqi, the vice president of the economic research department of the China State Development and Reform Committee, cited population expansion as the strongest factor prompting economic growth, and said that China, classified as a large population economy, possesses an abundance of labor, the principal condition for growth. Chen believes that the 20 million rural migrants moving into urban areas annually will create a consumer demand that will continue to fuel China's growth. Chen gave his opinions at the third China Economic Growth and Security Forum that started on Dec. 9, days after a panel of high-profile economists spoke of their concerns about the consistency of economic growth in China and the world. Morgan Stanley chief economist Stephen Roach, said at an academic forum in early December that the economy of the United States worsened in 2006 at a speed faster than predicted, according to a report from the China Securities Journal. Roach said the Chinese economy, unbalanced and fragile, will be confronting the perils of the US recession and trade protection and China should prepare itself by expanding its consumer base in case the US fails in its attempt at a soft landing, according to the newspaper. Andy Xie, former chief economist of the Morgan Stanley Asia-Pacific region, was quoted by the newspaper as saying that the "world economy will slow in 2007 and fall into a recession in 2008." Xie, along with Roach at the same forum, listed inflation, post-Olympics effects and predicted material price slides as evidence of an impending world wide recession. China should cap surging housing prices in order to make housing more affordable for city residents otherwise the industry may crash. Xie noted that "the real purchasing need is not that big" if factors such as compulsory relocation and overseas requirements are taken into consideration. (China Daily December 14, 2006)