Three weeks of snow across most of China has "taken a toll on the economy" but its impact will likely be mitigated over the year, a leading economist said at the weekend.
Fan Gang, director of the National Economic Research Institute, said on Saturday the long cold spell could stimulate investment, including upgrading the national power grid and improving the coal industry's infrastructure.
"The domestic market has the potential to spur economic development. There is no doubt such a big economy will encounter difficulties most years, but the economy is maintaining stable growth," Fan said, disputing some analysts' predictions the recent bad weather could be a major drag on growth.
Li Huiyong, a senior analyst at Shenyin and Wanguo Securities, forecast gross domestic product for the first quarter of this year would grow around 10.1 percent, 0.5 percentage points lower than an earlier prediction, due to slower growth in exports, investment and industrial production.
Li also predicted the consumer price index (CPI) would surge to 6.8 percent in January, 0.3 points higher than in December, and possibly set a new high in February.
The CPI rose 4.8 percent last year and hit an 11-year-high of 6.9 percent in November, above the government target of 3 percent.
Zhu Hongren, deputy director of the bureau of economic operations under the National Development and Reform Commission, said on Friday the snow will not disrupt economic growth.
"Snow is affecting the economy at the moment, but in the long run the country will maintain its quick economic growth.
Li Rongrong, chairman of the State Assets Supervision and Administration Commission (SASAC) said on Saturday the weather will not influence the overall performance of listed companies, although some faced temporary production difficulties due to transportation problems with energy shipments.
Meanwhile, two new closed-end stock funds gained approval from the China Securities Regulatory Commission on Friday, ending a five-month freeze on new funds in an effort to brake the fall of domestic equities.
The benchmark index dipped to 4,320.77 points on Friday, nearly 30 percent off its record high of mid-October, as investors sold holdings due to concerns over a possible recession in the United Sates and the country's worst snow in five decades.
The extreme weather conditions are estimated to have caused economic losses of about 53.8 billion yuan ($7.5 billion), as of Thursday.
The SASAC's Li told shareholders not to be over concerned about the sliding domestic stock market, as the country will make up the weather-related losses.
The State Grid and China Southern Power Grid have mobilized all their units to fix power equipment and streamline distribution, an SASAC official said.
Source: China Daily
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