Three weeks of snow across most of China have "taken a toll on the economy" but the impact will dissipate over the full year, according to Fan Gang, a renowned Chinese economist.

Fan, director of China's National Institute of Economic Research, said here on Saturday that the long snow spell would actually stimulate investment, including upgrading the power grid nationwide and improving the coal infrastructure.

"The domestic market also has great potential to spur economic development. There is no doubt that such a big economy will encounter various difficulties each year, but the Chinese economy is maintaining stable growth momentum," added Fan. He disputed some analysts' views that the snow disaster would be a major drag on growth.

Li Huiyong, a senior macro-economic analyst at Shenyin & Wanguo Securities, forecast that the gross domestic product (GDP) for the first quarter of 2008 would grow around 10.1 percent, 0.5 point lower than an earlier prediction, due to slower growth in exports, investment and industrial production.

Li also predicted that the consumer price index (CPI) would surge to 6.8 percent in January, 0.3 point higher than in December, and possibly set a new high in February. The Spring Festival, which begins on Feb. 7, is a traditional time for shopping sprees among Chinese.

The CPI rose 4.8 percent in 2007 and hit an 11-year-high of 6.9 percent just in November, well above the government target of 3 percent.

Zhu Hongren, deputy director of the Bureau of Economic Operations with the National Development and Reform Commission (NDRC), said on Friday, "The snow has affected the Chinese economy for the moment, but for the long run, the country will maintain a quick economic growth pace.

Li Rongrong, chairman of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), said on Saturday that the weather would not influence the overall performance of listed companies, although some companies faced interim production difficulties due to energy shipments stalled by transportation snags.

Two new closed-end stock funds gained approval from the China Securities Regulatory Commission on Friday, which ended a five-month freeze on new funds in an effort to brake the fall of domestic equities.

The benchmark index dipped to 4,320.77 points on Friday, nearly 30 percent off its record high of mid-October, as investors sold holdings due to concern over a possible U.S. recession and the country's worst snow in five decades, which had caused economic losses of about 53.8 billion yuan (7.5 billion U.S. dollars) by Jan. 31.

The domestic stock market has seen volatile trading in recent weeks, with shares sinking more than 7 percent on Jan. 22, the largest percentage loss in seven and a half months.

Li told shareholders that they need not to be too concerned about the sliding domestic stock market, adding that the country would make up the losses due to the snow havoc very soon.

State Grid and China Southern Power Grid were mobilizing all forces available to fix power equipment and streamline power distribution, according to the SASAC.

Sinopec, the country's largest oil refiner, had set up 10 temporary gas stations along the Beijing-Zhuhai Expressway to ease shortages, said SASAC.

China had mobilized all available railway containers to move power coal and ease electricity constraints that have hit many parts of the country. The containers' only other use would be to move relief materials, Xinhua learned on Sunday from the Ministry of Railways.

The latest ministry figures showed that more than 42,200 containers were loaded with power coal on Friday, up 12,000 from the previous day, a new record.

The railway line between Datong in the coal-producing province of Shanxi and Qinhuangdao, a port city in Hebei Province, which is a dedicated coal transport route, set a new daily freight record of 1 million tons.

(Xinhua News Agency February 3, 2008)