Researchers from
the State Council have presented their outlook for the policy,
market and macro economy for 2005.
The latest report by the Development Research Center
of the State Council has spotted out intrinsic dilemmas including
the economic expansion "in a rough way", possible rebound
of fixed asset investment which was reigned by administrative
harness, the lack of mechanism to sustain the rise of grain production
and farmers' income, the lingering systematic problems making
the bottleneck of energy supply, the momentum pushing the housing
prices up sharply, and the further reform on the financial system.
The report believes the country's economy will keep
running fast at a apce of 8.5 percent. Increases will still be
seen in investment, exports and consumption at 20 percent, 15
to 20 percent and 10 percent respectively. A 3 percent movement
of consumer price index is moderate enough to pose no sweeping
inflation threat. The tight supply of coal, oil, and power will
be eased much while the situation for transportation will still
be serious.
The report suggests that more economic and legal
tools be employed to consolidate the achievements of the macro-control
campaign and more attention be given to the agriculture. It insists
that further reform and systematic arrangements are the only right
solution to any problems threatening the health of the economy.
It also called for more care to the underprivileged in urban areas
and farmers who have to struggle in the pressure of rising prices.
Potential buyers in urban areas are more concerned
about property and car prices. In 2004 housing prices were up
fiercely especially in major cities like Shanghai due to the government's
tough control over land and credit while the auto market went
through a hard time.
The report assures consumers that the growth of housing
prices will be tempered in 2005 after a surge last year although
the brisk demand will continue to prop up the price inflation.
There are more idle houses available on the market
which help to narrow the gap between supply and demand. However,
developers will still push the real estate investment 20 percent
plus higher although the policy of cooling down the redhot sector
will remain valid such as strict control on demolition, difficult
access to credit, and more implementation of land control policy.
This, plus the effect of the interest rate hike last October,
is expected to work.
An expert from the Development Research Center of
the State Council thinks there is hope for a 14 percent comeback
of passenger cars in 2005 if the compulsory third party insurance,
fuel oil tax, as well as other policies offering better services
for consumers, are carried out and infrastructure of cities is
improved. He also expects buyers would be more ready to burn their
pocket as stable car prices are quite likely in 2005. However,
the report that the fuel oil tax will be levied within this year
has been proved to be not true.
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