Shanghai, January 23:

China’s economy is likely to became one of the world’s five biggest in 2005 as booming exports and surging investment again helped secure growth of well above nine per cent, analysts said today.

Ahead of Wednesday’s release of China’s 2005 economic data, analysts expect the world fastest growing major economy to surge between 9.5 and 10.3 per cent to surpass the two-trillion-dollar mark. “It will definitely go past France, so for sure China is going to be the number five economy in the world,” Chen Xingdong, an economist at BNP Paribas in Beijing, said.

France’s economy posted gross domestic product (GDP) of $2.04 trillion in 2004, according to World Bank figures, and economists estimate its economy was unlikely to have grown by more than two per cent last year. Given China’s rate of growth — around five times faster than Europe’s — the Asian juggernaut could ev-en surpass powerhouse Bri-tain, fourth largest economy.

“It would depend on the UK’s GDP. Number one the nominal GDP growth and number two the exchange rate of the British pound against the US dollar,” said Chen. Only last month the Chinese economy had officially been worth $1.6 trillion, a still formidable sum that placed China seventh on the list of world’s largest economies. But Beijing’s announcement on December 20 that the economy had been erroneously undervalued by $284 billion suddenly lifted China past Italy into the sixth spot.

Following the revaluation, the government said China’s economy had expanded at an average rate of 9.9 per cent between 1993 and 2004, up from 9.4 per cent reported previously, with growth of 10.1 per cent in 2004. For years international economists warned that the Chinese economy was undervalued because millions of service-orientated businesses had been unaccounted for. The adjustment led the National Development and Reform Commission, the nation’s top economic planning body to overhaul its 2005 GDP growth forecast from 9.4 per cent to 9.8 per cent. The tax bureau also raised its estimate to 9.8 per cent.

Economists were pleased with the revaluation because it meant the economy was in better shape than previously thought. “The details of the revisions also suggest that growth is on a more sustainable footing,” Lehman Brothers economist Robert Subbaraman said. The imbalances had led to fears both at home and abroad that the massive amount of fixed-asset investment, which at times neared a nerve-wracking high of 50 per cent of GDP, could lead to an inflationary crisis.

Managers can own stakes

BEIJING: Managers at China’s major state-owned enterprises (SOEs) will be allowed to hold stakes in their own firms, the government said in an easing of restrictions introduced last year. Management will now be allowed to buy small stakes in their companies although they cannot hold a combined stake that would give them control, the Assets Supervision and Administration Commission said. The rules banning the shareholdings were issued last April. — AFP