China Sees 8% Growth Possible in 2009

By Joe McDonald

BEIJING -- China's premier said the country can achieve 8% growth this year despite a worsening global economic crisis and promised more efforts to boost exports and create jobs.

"We face unprecedented difficulties and challenges," Premier Wen Jiabao warned in a nationally televised speech Thursday to China's legislature. However, he said, "We will be able to achieve this target" of 8% growth.

Wen promised to "dramatically increase" spending to counter the impact of the global slowdown that has thrown at least 20 million Chinese migrants out of work.

But he made no mention of possible new stimulus measures on top of a 4 trillion yuan ($586 billion) package unveiled in November. That was likely to disappoint Chinese financial markets, which rose Wednesday on hopes he might announce a new round of spending worth up to 10 trillion yuan ($1.5 trillion).

Private sector economists are forecasting 2009 growth as low as 5.6% -- the weakest in nearly two decades -- after economic expansion plunged to a seven-year low of 6.8% in the final quarter of 2008.

Beijing's stimulus is aimed at reducing reliance on exports, which plunged by 17.5% in January, by pumping money into the economy through higher spending on public works to boost domestic consumption. The government points to rising bank lending and power consumption as signs its slump might already be bottoming out.

Some analysts say growth could rebound as early as the quarter beginning in April. But others say China cannot recover until its key U.S. and European export markets do, which might not happen until next year.

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