Little room to moderate policy
By Lydia Chen |
October 19, 2011, Wednesday
|
Print Edition
Print Edition
A SPATE of data released yesterday indicates that China is heading toward a stable, albeit slower, economic growth, which suggested the government has little room to relax monetary policy, economists said.
Barclays Capital said in a report yesterday that as long as growth in the world's second-largest economy remains above 8 percent in the coming quarters, the government should not reverse its anti-inflationary stance.
Economists at Australia and New Zealand Banking Group agreed and believed it's too early for the People's Bank of China to ease its measures when inflationary pressure still has not abated.
However, both firms expected China may unveil proactive fiscal policies to assist small and medium-sized enterprises that are greatly affected by a slowing global growth and the government's anti-inflation stance.
ANZ forecast an easing of the reserve requirement ratio (RRR) for banks so that they may extend more loans to SMEs, which account for a substantial chunk of the country's economy.
Barclays, however, said it cannot rule out a RRR cut toward the end of the year. It also said that small banks may be the first to have the RRR cut. But it said that any cut may not happen before the Central Economic Work Conference that is usually held in early December to map out China's economic direction.
China has raised its benchmark interest rates five times since October, 2010 and hiked the RRR nine times to tame inflation that was 5.7 percent in the first three quarters.
Barclays and ANZ expected an economic soft landing for China. ANZ predicted growth in the fourth quarter of at least 9.4 percent annually while Barclays forecast an 8.5 percent of growth in the last three months of the year.
With capital inflow still large, ANZ said it forecasts the yuan will rise by 6 percent against the dollar this year, breaking 6.3 by the year's end.
Barclays Capital said in a report yesterday that as long as growth in the world's second-largest economy remains above 8 percent in the coming quarters, the government should not reverse its anti-inflationary stance.
Economists at Australia and New Zealand Banking Group agreed and believed it's too early for the People's Bank of China to ease its measures when inflationary pressure still has not abated.
However, both firms expected China may unveil proactive fiscal policies to assist small and medium-sized enterprises that are greatly affected by a slowing global growth and the government's anti-inflation stance.
ANZ forecast an easing of the reserve requirement ratio (RRR) for banks so that they may extend more loans to SMEs, which account for a substantial chunk of the country's economy.
Barclays, however, said it cannot rule out a RRR cut toward the end of the year. It also said that small banks may be the first to have the RRR cut. But it said that any cut may not happen before the Central Economic Work Conference that is usually held in early December to map out China's economic direction.
China has raised its benchmark interest rates five times since October, 2010 and hiked the RRR nine times to tame inflation that was 5.7 percent in the first three quarters.
Barclays and ANZ expected an economic soft landing for China. ANZ predicted growth in the fourth quarter of at least 9.4 percent annually while Barclays forecast an 8.5 percent of growth in the last three months of the year.
With capital inflow still large, ANZ said it forecasts the yuan will rise by 6 percent against the dollar this year, breaking 6.3 by the year's end.
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