Chinese government think tank predicts 10.2 percent economic growth in first quarter

China's economy will grow at a rate of 10.2 percent for the first quarter of the year, a government think tank said Tuesday, down only slightly from 2006's whole-year growth rate of 10.7 percent.

The State Information Center predicted further slowing in the second quarter to 10.0 percent growth, as policies to cool the sizzling economy take effect.

Trade will continue to grow by double-digits in the first half of the year, while retail sales growth will remain above 14 percent, the center said in a report published in the newspaper China Securities Journal.

However, employment pressure will remain severe, especially among recent university graduates whose numbers have surged in recent years, it said. Changes in the global economy may also have a knock-on effect for China, the report said.

It said the consumer price index, a key indicator of inflation, will rise 3 percent in the first quarter and 3.5 percent in the second as increased prices for animal food send the cost of pork and poultry soaring, the report said.

The predictions for 2007 put China closer to overtaking Germany as the world's third-largest economy after the United States and Japan. Germany's gross domestic product last year was US$3 billion ([#x20ac]2.32 billion), compared to about US$2.7 billion ([#x20ac]2.08 billion) for China. Yet Germany's growth rate of 2.5 percent was far below China's.

China's growth predictions have prompted speculation that Beijing might raise interest rates or impose other economic controls to slow growth and ease worries that runaway spending could spark inflation or a debt crisis.

The government has already raised interest rates twice, repeatedly tightened bank credit and imposed curbs on investment in real estate, auto factories and other projects.