Updated: 2005-12-26 09:03
Chinese central bank's research bureau raised its gross domestic product (GDP) growth estimate for this year Friday to 9.4 percent from 9.2 percent.

The bureau cut its consumer price index (CPI) forecast for 2005 to 1.8 percent from 2 percent, according to a report by Tang Xu, the director of the research bureau, published in the Financial News.

The previous forecast issued by the bureau was in late September.

Expectations for the yuan to rise have eased, as shown by the fact that the one-year forward exchange rate against the U.S. dollar has stabilized since Nov. 11th, said the report.

China's GDP is expected to grow 8.8 percent and CPI is expected to rise 2 percent in 2006, it said.

China's GDP is expected to grow 9 percent in the fourth quarter of this year, and CPI is expected to rise 1.3 percent in the same period, according to the report.

The report also summarized the factors that will have an influence on prices next year.

High international oil prices and a rebound in investment would put pressure on prices to rise. Utilities and resources prices have the potential to rise next year, which would be an important factor in pushing the CPI up, it said.

Changes to the pricing system for resources, such as oil, electricity, water, natural gas and coal, will push prices higher next year, said the report. China reformed the pricing system this year, which involves a gradual loosening of government control over resources prices to allow more market influence.

But a decline in prices in sectors with overexpansion problems including cement, iron and steel, and uncertainty over grain prices could push prices lower, it said.