Fourteen research institutions have predicted China's economic growth for the first quarter will be between 10.4 and 10.5 percent, while the consumer price index (CPI) will be between 6.8 and 7.1 percent.

The institutions include the State Information Center, a government think tank; and economic research centers from Peking and Tsinghua universities.

The economists said China faces high inflationary pressure, but the global slowdown will not significantly affect it.

Zhu Baoliang, deputy head of the prediction department of the State Information Center, said yesterday China's industrial production, investment, consumption, imports and exports, will be affected to varying degrees, particularly farm produce because of the recent bad weather. The result will be price rises in the coming months.

CPI, the major inflation indicator, will rise more than five percent this year compared to 4.8 percent last year, Zhu said. He said prices of primary products will also rise.

The economy increasingly relies on international markets and is responsive to global price rises, Zhu said.

There is mounting world demand for primary products, such as petroleum, farm produce and minerals. Prices of these are shored up by the depreciation of the dollar, speculation and other factors such as geo-politics, he said.

Lin Yifu, head of the research center for the Chinese economy at Peking University, said the US economy will likely slide into stagnation on the back of the subprime mortgage crisis, but this will not have much impact on China's financial sector as Chinese banks hold little subprime assets.

(Xinhua News Agency February 26, 2008)