The impact of the latter may be offset partially by growth in investment in the state-dominated power generation sector and by demand for real estate that is being boosted by negative real interest rates. Consumption should also remain strong, especially in rural areas which have seen the strongest growth incomes for seven years. Finally, export demand is expected to be buoyant as quotas on textile exports will no longer be in force in 2005. Overall, growth is likely to be below potential in 2005, before recovering in 2006. The projected slowdown in domestic food prices should dampen inflation, but continued intervention to stabilise the value of the renminbi brings a risk of higher than expected inflation.

Population (000s), 2003 - 1 292 270

Area (000 sq km) 9 597

Currency Renminbi

GDP (Billion USD), 2003 - 1 468

Life expectancy at birth (Women, Men), 2002 - 73.9, 70.0

Total labour force (000s), 2003 - 752 320

Government type Communist state

Indicators  % change unless otherwise indicated

                                                              2004  2005   2006

Real GDP growth                                    9.2    8.0     8.5

Inflation (mid-year)                              4.2    4.0     4.0

Fiscal balance (% of GDP)                    -2.0   -1.7   -1.7

Current account balance(% of GDP)    1.1     1.8    2.2

Source: OECD

©OECD Observer No 245, November 2004