China’s economic growth to stabilize in Q4

17  January 2013

BEIJING — The slowdown in China’s economic growth will be curbed in the fourth quarter of the year following government measures but uncertainties will remain for future development, a Chinese think tank said in a report Sunday.

China’s economy is expected to grow by 7.7 percent in the first three quarters of 2012, while for the whole year, the growth rate will be 7.8 percent, the Center for China in the World Economy under the Tsinghua University forecasted in the report.

The Chinese economy slowed to 7.6 percent in the second quarter, marking the slowest pace of growth in more than three years. The CCWE said the slowdown of growth in the first three quarters is a result of decelerating fixed asset investment, especially in real estate, which will be reversed after the government stepped up approvals for infrastructure projects to boost growth.

The National Development and Reform Commission approved dozens of infrastructure projects worth more than 1 trillion yuan ($157.73 billion) earlier this month, for highways, ports, railways, sewage networks and waste treatment plants across the country.

China still has potential for rapid growth in the medium and long term, and urbanization will be the greatest boost for the country’s future development, according to the report.

The CCWE estimated that China’s GDP will grow by 8.2 percent year-on-year in the first half of next year, while the whole of 2013 will be 8 percent.

However, the CCWE said China’s economy is also facing enormous risks, including global political upheaval and limited choices in making monetary policies.

The future of Sino-Japan relations is one of the most critical elements to influence China’s economic development, it said.

Meanwhile, Chinese policy makers have limited room for further adjustments in monetary policies, as the country is likely to face inflationary pressures next year due to new monetary easing programs in other major economies, as well as domestic stimulus plans and rising prices of agricultural products.

The rebound in property prices has also held the government from making new moves in monetary policies, said the report.

The CCWE said China may see an inflation rate of 2.8 percent this year, while for the coming years, consumer prices will grow by 3 percent to 5 percent annually.

Li Daokui, head of the CCWE, said there is no hard-landing risk in a short term, but the next three to five years will be a difficult period for China’s economy, during which the global economic and financial situation will remain turbulent.

Special attention should be paid to economic adjustments in the United States, which might recur several times and bring new waves of economic and financial turmoil to the rest of the world, said Li, a former advisor to China’s central bank.

If the Chinese government could introduce more reform measures to consolidate the market economy, the country might see a relatively higher growth in the latter part of the next decade, he said.