The State Development and Reform Commission forecasts in a report on December 29 that China's GDP growth will drop back to 8.5 percent next year following a 9.1 percent expansion this year due to a slow-down expected for both investment and exports.

The report sets the investment increase at around 18 percent, retailing sales of consumer products at about 9.5 percent , exports at 15 percent, CPI at 3 percent and industries above the scale at 16 percent.

The Commission has not seen any necessity of interest rate hike next year although the government will consolidate its control over investment, says the report.

The report explains that this is because the interest rate hike this year is, to a great extent, a result of a trade-off. But the actual inflation is not high this year and will not be next year. In particular, investment and economy will continue to cool off. All of these have given no reason for interest rate hike.

But the report sees possibility of a cycle of interest rates increase in 2006 and 2007.

The Commission suggests prevention of the tendency of the real estate sector going overheating and a sharp descending of exports.

The State Bureau of Statistics gives similar estimation on economic growth of next year. Its forecast for CPI next year is 4 percent. It also believes the fiscal revenue will go up only moderately next year at 14 percent, compared with around 21 percent in 2004.

By People's Daily Online