Economist: Economic toll of snow temporary
Updated: 2008-02-03 21:25
BEIJING -- Three weeks of snow across most of China have "taken a toll on the economy" but the impact will dissipate over the full year, according to renowned economist Fan Gang.
Fan, director of China's National Institute of Economic Research, said here on Saturday the long snow spell would actually stimulate investment, including upgrading the power grid nationwide and improving coal infrastructure.
"The domestic market also has great potential to spur economic development. There is no doubt that such a big economy will encounter various difficulties each year, but the Chinese economy is maintaining stable growth momentum," added Fan. He disputed the views of some analysts that the snow would be a major drag on growth.
Li Huiyong, a senior macro-economic analyst at Shenyin and Wanguo Securities, forecast the gross domestic product (GDP) for the first quarter of 2008 would grow around 10.1 percent, 0.5 point lower than an earlier prediction. This was due to slower growth in exports, investment and industrial production.
He also predicted the consumer price index (CPI) would surge to 6.8 percent in January, 0.3 point higher than in December, and possibly set a new high in February. The Spring Festival, which begins on Thursday, is a traditional time for shopping sprees among Chinese.
The CPI rose 4.8 percent in 2007 and hit an 11-year high of 6.9 percent in November, well above the government target of three percent.
Zhu Hongren, deputy director of the Bureau of Economic Operations with the National Development and Reform Commission (NDRC), said on Friday, "The snow has affected the Chinese economy for the moment. But for the long run, the country will maintain a quick economic growth pace".
Li Rongrong, chairman of the state-owned Assets Supervision and Administration Commission of the State Council (SASAC), said on Saturday the weather would not influence the overall performance of listed companies. Some companies, however, faced interim production difficulties due to energy shipments stalled by transport snags.
On Friday, two new closed-end stock funds gained approval from the China Securities Regulatory Commission, ending a five-month freeze on new funds in an effort to break 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. Investors sold holdings due to concern over a possible US recession and the country's worst snow in five decades that had caused economic loss of about 53.8 billion yuan (7.5 billion US dollars) by January 31.
The domestic stock market has also seen volatile trading in recent weeks, with shares sinking more than seven percent on January 22, the largest percentage loss in 7.5 months.
Li told shareholders they need not to be too concerned about the sliding domestic market, adding the country would make up the losses due to the snow havoc very soon.
The State Grid and China Southern Power Grid were mobilizing all forces available to fix power equipment and streamline power distribution, according to the SASAC.
Sinopec, the country's largest oil refiner, set up 10 temporary gas stations along the Beijing-Zhuhai Expressway to ease shortages, said SASAC.
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