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China's economy to grow by 8.5 pct in 2012: gov't think tank

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GUIYANG, Feb. 23 (Xinhua) -- China's economy is expected to expand by 8.5 percent in 2012, slightly down from 9.2 percent in 2011, the head of a Chinese government think tank said Thursday.

The world's second-largest economy faces relatively significant downward pressure this year due to increasingly complicated domestic and overseas situations, said Li Wei, director of the Development Research Center of the State Council, or China's Cabinet.

China's annual export growth is likely to slow to 10 percent from 20.3 percent in 2011, as the global economic outlook has been darkened by slow economic recovery in the U.S. and Europe's sovereign debt crisis, Li said at a conference held in Guiyang, capital of southwest China's Guizhou province.

Li projected the country's fixed-asset investment to grow by some 20 percent, down by four percentage points from a year earlier, as the manufacturing and real estate sectors have been hit by slowing exports and curbing policies, respectively.

A moderate economic slowdown will help to curb inflation triggered by excess demand and also encourage more mergers and acquisitions, which will speed up the adjustment of China's economic structure, he said.

Once the potential economic growth rate begins a downward trend, expansionary measures cannot increase the growth rate, but only lead to a "bubble" economy, Li said.

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