Latest News:  
Beijing   Sunny/Cloudy    29 / 16 ℃  City Forecast

Home>>China Business

World Bank highlights challenges facing China (2)

By Wei Tian and Li Tao (China Daily)

09:27, May 24, 2012

"Ongoing curbing efforts have been helpful in cooling the property market, but administrative regulations would better give way to market-based measures such as raising the cost of capital and more investment opportunities," according to the report.

Nonetheless, given heightened levels of uncertainty, policy should remain flexible, with frequent but gradual adjustments as new data became available, the report said.

"Monetary policy adjustment is not enough to rescue China from the current situation," said Liu Yuhui, a researcher with the Institute of Finance and Banking at the Chinese Academy of Social Sciences.

The proportion of long-term loans has shrunk to only 20 percent of total credit in the first four months of this year, reflecting sluggish household demand, Liu said.

"People have stopped borrowing and focused more on paying debt … the government needs to adopt more fiscal tools to inject a force for growth," he said.

Liu Shangxi, a researcher with the Ministry of Finance, said positive fiscal policy will be mainly carried out throughout investment such as affordable housing.

However, fears were also raised over the sustainability and effectiveness of short-term measures to boost domestic consumption.

Lu Zhengwei, chief economist with the Industrial Bank, said consumption has already contributed 6.2 percent to economic growth in the first quarter, the highest in 20 years.

"Short-term stimuli are pointless … a way out would be to let the currency float with the dollar, and currencies of emerging economies, to allow an adjustment on the overvalued rate," Lu said.

Also on Wednesday, economists at Morgan Stanley said in Hong Kong that the economy may bottom out in the second quarter, with a rebound expected to start in the third quarter.

Downward pressure remains, as seen when GDP growth eased to 8.1 percent in the first quarter from 8.9 percent in the fourth quarter of last year, Helen Qiao, Greater China chief economist at Morgan Stanley, said.

"There will be more bad news than good in the near term, and the second quarter will be the worst," Qiao told a media briefing in Hong Kong on Wednesday.

Morgan Stanley on Monday cut its GDP forecast to 8.5 percent this year from the 9 percent forecast previously, citing a worse-than-expected slowdown in the first four months this year.

【1】 【2】 【3】


Leave your comment0 comments

  1. Name


Selections for you

  1. Marginal weather flight training

  2. Preview of jewelry auction held in Hong Kong

  3. Longmen Grottos reassessed as national 5A scenic spot

  4. Animal Photography: Portraits of endangered species

Most Popular


  1. What is the US' aim behind arms sales to Taiwan?
  2. Investment-driven growth no longer a viable option
  3. Summit can't stop NATO from being marginalized
  4. Easing liquidity not a cure-all
  5. As Beijing remains mum, trade relationships suffer
  6. Intentions behind Japanese right-wingers’ collusion with ‘World Uyghur Congress’
  7. Real intentions of US exercise in Middle East
  8. Short-term trade recovery expected to elude China
  9. Stronger policies needed to push dividend payouts
  10. US, China must co-op to defuse confidence crisis

What's happening in China

Sewage suspected in fish death, Sichuan

  1. Chinese grads prefer to work in smaller cities
  2. Chinese cities build digital geographic systems
  3. Winning streak ends for mainland stocks
  4. Bond market to expand for SMEs
  5. A blind woman's talent for words

China Features

  1. High ticket prices, unaffordable landscapes
  2. Huangyan tensions
  3. 2012 Russia-China joint naval exercise
  4. 2nd Beijing International Film Festival
  5. Auto China 2012

PD Online Data

  1. Spring Festival
  2. Chinese ethnic odyssey
  3. Yangge in Shaanxi
  4. Gaoqiao in Northern China
  5. The drum dance in Ansai