Optimism growing in 3rd quarter

08:20, October 23, 2009      

Email | Print | Subscribe | Comments | Forum 

With rising unemployment, slumping exports, a slowdown in GDP growth and increasing uncertainty at the start of the year, few experts dared to predict that China would end the year with the bold bounce back that National Statistics Bureau (NBS) data yesterday showed it had.

The new numbers indicate China had year-on-year GDP growth in the third quarter of 8.9 percent - and that it was 7.7 percent overall for the first three quarters of 2009.

The NBS said China saw solid growth momentum during the third quarter - and it may continue for several months.

"We can say with certainty that China will achieve its goal of 8 percent GDP growth for the whole year," said NBS spokesman Li Xiaochao.

"There's no doubt about that."

"Economic data in September shows a V-shaped recovery across the board," added Nomura International (HK) in a report.

Emboldened by China's third-quarter GDP figure, JP Morgan raised the country's 2009 full-year GDP growth forecast to 8.6 percent. It had earlier forecast 8.4 percent. For 2010, JP Morgan is now expecting 9.5 percent.

"Looking ahead, we expect the economy to continue growing solidly in the coming quarters," the company said.

Liu Shijin, deputy chief and senior research fellow at the State Council's Development Research Center (DRC), predicted that China's economy will expand by between 8 and 9 percent year-on-year in 2010.

GDP growth had slowed to 6.1 percent in the first quarter of the year as a result of the global financial crisis and the ensuing recession. However, China's 4 trillion yuan ($586 billion) stimulus package, that began in November, turned the tide.

The government's spending worked "remarkably" well, according to David Dollar, the US Treasury's economic and financial emissary to China.

"I think the GDP data released this morning are very positive; China 's stimulus package has obviously had its impact it works very well," he told China Daily.

Experts said fixed-asset investment and retail sales helped the Chinese economy outperform other major economies, despite the fact that its shrinking exports were a drag on its progress.

Some pundits, however, have expressed concerns about a possible surge in inflation next year because of the significant investment China made in its economy.

Inflation fears

The notes of caution were sounded despite the fact that the consumer price index - usually a major gauge of inflation - remained weak, falling 0.8 percent in September and 1.1 percent in the first three quarters from a year earlier.

The inflation fears were stoked by month-on-month positive price growth since August, although many observers believe inflation is not an imminent problem.

Liu of the DRC warned that the country may face inflation pressure starting in the middle of next year, with the CPI growth rate reaching between 3 and 5 percent. Liu said the change will be driven by the increased cost of agricultural products and price hikes for commodities on the international market that will follow after the world's economy continues to recover.

"We cannot rule out the possibility of the CPI rising above 5 percent," he said.

Dong Xianan, chief macroeconomic analyst with Industrial Securities, said the CPI will rise significantly but may not exceed 4 percent next year.

Source: China Daily
  • Do you have something to say?
Special Coverage
  • 60th anniversary of founding of PRC
Major headlines
Editor's Pick
Most Popular
Hot Forum Dicussion