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China GDP set to grow by almost 8% in Q2

CHINA'S economy, which has hit the bottom in this recession, may grow by nearly 8 percent in the second quarter, said an analyst of the National Bureau of Statistics yesterday.

"China's economy has shown signs of rebound," Guo Tongxin said in an article published on the bureau's Website. "Judging from the data, the bottom in this recession should have been touched in the fourth quarter of last year or the first quarter of this year."

He forecast China's gross domestic product to expand nearly 8 percent in the second quarter, after growing 6.1 percent in the first quarter, the weakest since 1992.

He said the government's proactive fiscal and moderately relaxed monetary policies have been positive for the country's GDP.

Also yesterday, Standard Chartered Bank Ltd raised its 2009 forecast for China's economic growth to 7.4 percent from 6.8 percent, propelled by the stimulus and a boom in housing transactions.

"The higher forecast is the result of vast amounts of bank-financed infrastructure projects coming on line and new projects starting as local governments get their approval and capital in place," said Stephen Green, a Standard Chartered economist. "Also, a surprise to just about everyone is the sustained improvement in the residential housing market. The overall economic growth has picked up, and we see no significant bumps in the road this year."

Last month's industrial output, which grew 8.9 percent from a year earlier, has returned to the level similar to October when the financial crisis broke. The country's stimulus measures helped propel urban fixed-asset investment and retail sales, Guo said.

But Guo warned "the external economic environment remains tough and domestic demand is not quite steady, which may become obstacles for further economic recovery."

But sagging external demand was a major obstacle which dragged down China's economy.

In the first quarter of this year, the fall in exports took 2.8 percent off China's economy, compared with an average 20 percent contribution in the period from 2005 to 2007.


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