The Asian Development Outlook 2004 Update, which forecasts economic trends in the region, said China's gross domestic product(GDP) economy is expected to grow by 8.8 percent in 2004 and slow to 8 percent in 2005.

"The rapid pace of investment growth has slowed from the very high levels experienced in the first quarter of this year, reflecting the gradual impact of policy-tightening measures," said Bruce Murray, resident representative of ADB Resident Mission in China, at a press conference.

Inflation is expected to moderate from slightly around 5 percent in mid-2004, and consumption is expected to increase by 13percent in 2005 supported by higher urban and rural incomes, he said.

"China's rapidly growing markets are providing opportunities for other countries, particularly Asian countries, therefore China will remain the leading destination for global foreign direct investment. Imports will grow faster than exports in 2005," said Bruce.

According to the report, China has already scored progress in reducing by half the number of people living below one US dollar per day, and has also made progress in providing access to basic education and reducing maternity mortality as well.

The report acknowledged China is an energy-intensive country, which uses more than three quarters of a barrel of oil for every US$1,000 of GDP, about double the average of other Asian countries. "More efforts are needed in the areas of energy efficiency and energy conservation," said Bruce.

More progress is needed in gender issues, HIV/AIDS prevention and control, safe drinking water in rural areas, child mortality and environmental damage, he added.

The report suggested that the Chinese government continue its macroeconomic tightening measures and, in an attempt to avoid a hard landing for the economy, encourage investment and growth in lagging sectors like agriculture, small and medium enterprises, the private sector, public health and education.

(Xinhua News Agency September 23, 2004)