At the same time, the State Information Centre, 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 lacklustre consumption, the China Daily said.
The report said the economy would continue to slow in the third quarter as Severe Acute Respiratory Syndrome (SARS), which struck in the second, took its toll on a wide range of industries, but fast growth would resume in the final three months of the year.
China's top legislator, Wu Bangguo, gave a more modest prediction on Sunday saying the economy would grow by at least 7%, according to the Xinhua news agency.
"We are confident that the objective of 7% economic growth in the year can be realised," said Wu, chairman of the National People's Congress, who was in the Philippines for an official visit.
Back to the shops
Economic growth in coming months will be fuelled 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.
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.
Investment is predicted to grow 20% 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 Centre forecast a 20% 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.
Spectre of unemployment
Imports this year, however, are expected to rise 27%, six percentage points more than in the previous 12 months, cutting the trade surplus by 50% to 15 billion dollars.
The uptrend will continue into 2004, with GDP growth to be maintained at eight percent, the report said, noting that the global economy is showing signs of a resurgence, which will have a positive impact on China's trade.
High unemployment, however, will pose a severe challenge to China's economy, as new jobs are not predicted to be created each year even if GDP growth is as high as 8.5%.
More than 2000 poorly managed and ill-equipped state-owned enterprises are expected to go bankrupt within five years, which will exacerbate China's worsening unemployment problem, the China Daily said in a separate report on Monday.