Steps must not hurt sustainable growth
By Wang Yanlin |
June 29, 2012, Friday
|
Print Edition
Print Edition
THE measures China takes to stimulate its economy to counter the global economic downturn should not be at the cost of sustainable growth, economists said last night in a seminar during the Lujiazui Forum.
"China has to carry out more easing policies if the authorities don't want to see a sharper slowdown," said Qu Hongbin, chief economist for China at HSBC. "There are risks for China's growth rate to fall below 7.5 percent (in the following quarters), which require the policymakers to take decisive action."
Other economists suggested China should stimulate the economy by favoring sustainable development, and should not repeat the mistake four years ago of launching excessive stimulus for investment.
Chetan Ahya, an economist at Morgan Stanley, said desperate emerging markets may do anything to grow. "They still want to spur the economy through lax monetary policies and fiscal deficit. However, that is definitely not good growth," he warned.
The HSBC Flash Purchasing Managers' Index, the earliest indicator of China's industrial sector, fell to a seven-month low of 48.1 in June from May's final reading of 48.4. It indicated manufacturing activities shrank for an eighth month - the longest streak since 2008.
China's gross domestic product grew 8.1 percent from a year earlier in the first quarter, the slowest in nearly three years.
To stimulate growth, China has unveiled measures, including subsidies for energy-efficient consumption, expansion of private investment in state-dominated sectors, faster nod for new investment projects and tax reform acceleration.
China also cut interest rate this month and allowed banks more leeway to set rates.
"China has to carry out more easing policies if the authorities don't want to see a sharper slowdown," said Qu Hongbin, chief economist for China at HSBC. "There are risks for China's growth rate to fall below 7.5 percent (in the following quarters), which require the policymakers to take decisive action."
Other economists suggested China should stimulate the economy by favoring sustainable development, and should not repeat the mistake four years ago of launching excessive stimulus for investment.
Chetan Ahya, an economist at Morgan Stanley, said desperate emerging markets may do anything to grow. "They still want to spur the economy through lax monetary policies and fiscal deficit. However, that is definitely not good growth," he warned.
The HSBC Flash Purchasing Managers' Index, the earliest indicator of China's industrial sector, fell to a seven-month low of 48.1 in June from May's final reading of 48.4. It indicated manufacturing activities shrank for an eighth month - the longest streak since 2008.
China's gross domestic product grew 8.1 percent from a year earlier in the first quarter, the slowest in nearly three years.
To stimulate growth, China has unveiled measures, including subsidies for energy-efficient consumption, expansion of private investment in state-dominated sectors, faster nod for new investment projects and tax reform acceleration.
China also cut interest rate this month and allowed banks more leeway to set rates.
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