China's Gross Domestic Product (GDP) is projected to grow by 10.2 percent to reach 27.93 trillion yuan (US$3.88 trillion) in 2008, and the consumer price index (CPI) is to jump by 4.4 percent, according to a report by the country's major think tank.

The report, issued on Friday by the Chinese Academy of Sciences (CAS), predicted China's economy would continue to enjoy strong growth, driven by the favorable economic environment.

However, the report said, the growth would be slowed down by the fluctuating prices of resource commodities in the global and domestic markets, as well as long-standing systematic problems of China's economy.

Yao Jingyuan, the chief economist of the National Bureau of Statistics (NBS), said that China's GDP is to grow by 11.5 percent in 2007.

The CAS report echoed previous predictions that the world's fastest growing major economy is likely to expand at a slower rate in 2008 than it did the previous year.

The State Information Center (SIC) predicted a week ago that China's GDP growth would slow to 10.8 percent in 2008.

The academy also predicted a 4.4 percent rise of the consumer price index (CPI) for this year with economic tightening measures taking effect.

But it warned the index could rise to 5.8 percent if the government fails to work out effective control policies.

In 2008, the inflation pressure will continue to mount up, said the report issued by the Center for Forecasting Science of Chinese Academy of Science (CAS) here Friday.

In the first 11 months of 2007, the CPI grew 4.6 percent, according to the National Bureau of Statistics (NBS).

And the annual figure is estimated to stand at 4.7 percent, far higher than the government-set alarm level of 3 percent.

The report attributed the risks to huge demand of capital goods fueled by fast economic growth, the expanding imbalance of international payments, high prices of natural resource commodities in the domestic and international markets, increasing money supply and soaring housing price.

The CAS experts suggested that, besides the macroeconomic policies already in operation, the country should ensure the food supply to deal with the price hikes at the source.

It should be done to improve the state stock of commodities and speed up tax reform policies on natural resource commodities such as oil and natural gas, the report said.

A healthy real estate market will also contribute, it said.

With effective measures, the CPI growth is likely to slow down in June or July, according to the report.

Taming inflation has been a red hot issue in recent months. The country announced in late December a tight monetary policy for the first time in the past ten years and the central bank increased the interest rates six times last year.

The CAS report also predicted that the primary, secondary and tertiary industries will expand at 4.1 percent, 12 percent and 11.5 percent, respectively.

Housing prices to keep rising

The CAS report predicted that housing prices in China would keep on rising this year and the increase rate would roughly equal that of 2007.

The sale of residential buildings this year would hit 697.99 million square meters, up 2.24 percent year-on-year, according to the report.

The real estate market would maintain a "good momentum," and investment in the property sector would reach 2.54 trillion yuan (about 347.5 billion yuan), the report said.

The total floor space of "completed" buildings would drop 8.2 percent to 1.9 billion square meters in 2008, leading to a further dwindling of the housing supply, said the report, noting that the imbalance between supply and demand would be aggravated.

From January to November of 2007, housing prices in 70 major Chinese cities jumped 7.3 percent year-on-year. Housing prices were up at a rate of 10.5 percent in November alone, a report by the Chinese Academy of Social Sciences (CASS) showed.

The November rate was the highest monthly gain since July 2005 when the monthly housing price survey was started.

(Xinhua News Agency January 12, 2008)