BEIJING, Sept 1: China’s economy will expand 8.3 per cent this year despite the impact of Sars and the rapid growth will continue into next year, state media said Monday, citing a government-sponsored report.

At the same time, the State Information Center, which compiled the report, warned that China, one of the fastest growing major economies in

the world, must address the problems of high unemployment, inefficiency and lackluster consumption, the China Daily said.

The report said the economy will continue to slow in the third quarter as Sars, which struck in the second, took its toll on a wide range of industries but fast growth will resume in the final three months of the year.

China’s top legislator Wu Bangguo on Sunday gave a more modest prediction, saying the economy will grow by at least seven per cent, according to the Xinhua news agency.

We are confident that the objective of seven per cent economic growth in the year can be realized, said Wu, chairman of the National People’s Congress, who was in the Philippines for an official visit.

Economic growth in coming months will be fueled by expanding exports and a resumption in consumer spending, the report said.

Growth in consumption, however, will be kept in check by only modest gains in income, especially in rural areas, leaving it below 2002’s increase but ahead of the first half performance, the report said.

Investment is predicted to grow 20 per cent in the second half of the year — a 12 percentage point drop from the first half.

Sars put a halt to many trade negotiations when it broke out early in the year as overseas and domestic investors from unaffected cities avoided travelling to those that were badly hit, including Beijing.

The State Information Center forecast a 20 per cent growth in exports this year, a drop of two percentage points over 2002, noting that some countries had blocked Chinese exports, citing Sars as the reason.—AFP