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People's Daily Online>>China Business

GDP could slow further amid uncertainties

By Chen Jia (China Daily)

08:15, March 23, 2012

China's economic growth may further slow in the first quarter to 8.5 percent, from 8.9 percent in the fourth quarter of 2011, with the potential risks of a sharper global deterioration and a sudden domestic property downturn raising the government's concerns about policy changes, a senior economist from the State Council's think tank said on Thursday.

GDP growth for the full year is likely to reach 8.5 percent, above the government's target of 7.5 percent, despite a "combination of shrinking short-term demand and falling long-term potential productivity", said Yu Bin, director-general of the Department of Macroeconomic Research Center of the State Council.

Potential risks arise from a deepening export drop as the European debt crisis intensifies and the real estate sector cools down, Yu told a news conference.

A preliminary gauge of domestic manufacturing sector operating conditions - the HSBC Flash Purchasing Managers Index - declined to a four-month low of 48.1 in March, compared with 49.1 in February, according to HSBC Holdings Plc.

A reading below 50 means economic contraction; one above 50 indicates expansion.

"Growth could slow further amid a combination of sluggish new export orders and softening domestic demand," Qu Hongbin, chief economist in China and co-head of Asian economic research at HSBC, wrote in a research note.

In addition, the sub-index of employment fell to its lowest since March 2009, indicating that slowing manufacturing production was hindering companies' hiring plans, said Qu.

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