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China's GDP growth projected at 8.5% this year
By Wang Yanlin |
January 10, 2012, Tuesday
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Online Edition
Online Edition
CHINA'S economic growth may slow to 8.5 percent in the last quarter of 2011 and may maintain that pace this year, economists said.
Such a growth rate is tolerable and can help the nation address its problems in economic structure, they said. But still, China needs to ease its policies selectively to avoid a possible hard landing.
The National Bureau of Statistics is due to release the gross domestic product data next Tuesday.
"China's current monetary policy stance is too tight," said Shen Jianguang, chief economist for China at Mizuho Securities Asia Ltd, during the Blue Ink Forum held by Fudan University's School of Management.
"If China wants a stable growth rate, it needs to increase market liquidity and make policies more supportive for real economy participants."
He said M2, the broadest measure of money supply, grew 12.7 percent last year, lower than the target of 16 percent. Substantially it squeezed the market credit.
"Chinese manufacturers have to deal with surging labor costs, higher prices of raw materials, tight credit and a stronger yuan. If policies are not relaxed, they will suffer more and some may be driven out of the market," Shen said.
Due to the still negative real interest rates, Shen said the central bank is unlikely to decrease interest rates anytime soon. But the credit regulator may allow five cuts of reserve requirement ratio this year to boost money supply.
Wang Xiaolu, deputy director of the National Economic Research Institute under the China Reform Foundation, said China should accelerate the pace of reform to avoid potential economic crisis.
"China has serious imbalance in income distribution. If not addressed properly, it will threaten the stable economic growth," Wang said.
He pointed out that the current problem is that the government, firms of monopoly and rich people are earning way too much, and that is unfair.
Wang expected China's GDP to expand 8.5 percent or below this year.
Bank of Communications also said in a note that China's economic growth will stay around 8.5 percent in 2012, hitting a low of 8 percent in the first three months and returning to 9 percent in the last quarter. Inflation rate is estimated around 2.7 percent and 3.3 percent, allowing room for policy easing.
Wang Tao, a UBS economist, predicted China's growth may weaken to 8 percent this year because of dim export outlook and corrections in the housing market.
Such a growth rate is tolerable and can help the nation address its problems in economic structure, they said. But still, China needs to ease its policies selectively to avoid a possible hard landing.
The National Bureau of Statistics is due to release the gross domestic product data next Tuesday.
"China's current monetary policy stance is too tight," said Shen Jianguang, chief economist for China at Mizuho Securities Asia Ltd, during the Blue Ink Forum held by Fudan University's School of Management.
"If China wants a stable growth rate, it needs to increase market liquidity and make policies more supportive for real economy participants."
He said M2, the broadest measure of money supply, grew 12.7 percent last year, lower than the target of 16 percent. Substantially it squeezed the market credit.
"Chinese manufacturers have to deal with surging labor costs, higher prices of raw materials, tight credit and a stronger yuan. If policies are not relaxed, they will suffer more and some may be driven out of the market," Shen said.
Due to the still negative real interest rates, Shen said the central bank is unlikely to decrease interest rates anytime soon. But the credit regulator may allow five cuts of reserve requirement ratio this year to boost money supply.
Wang Xiaolu, deputy director of the National Economic Research Institute under the China Reform Foundation, said China should accelerate the pace of reform to avoid potential economic crisis.
"China has serious imbalance in income distribution. If not addressed properly, it will threaten the stable economic growth," Wang said.
He pointed out that the current problem is that the government, firms of monopoly and rich people are earning way too much, and that is unfair.
Wang expected China's GDP to expand 8.5 percent or below this year.
Bank of Communications also said in a note that China's economic growth will stay around 8.5 percent in 2012, hitting a low of 8 percent in the first three months and returning to 9 percent in the last quarter. Inflation rate is estimated around 2.7 percent and 3.3 percent, allowing room for policy easing.
Wang Tao, a UBS economist, predicted China's growth may weaken to 8 percent this year because of dim export outlook and corrections in the housing market.
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