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Forum offers sobering views of Chinese economy

By Wang Yanlin (Shanghai Daily)

11:33, November 24, 2012

DESPITE recent signs of economic recovery, China is under great pressure to maintain the growth momentum because of uncertainties in exports and overestimated benefits of urbanization, economists said today at the Shanghai International Private Equity Forum.

"We should avoid being too optimistic," said Shen Jianguang, managing director and chief Asia economist at Mizuho Securities Asia Ltd, citing falling trade as a potential threat to China's growth next year.

Although China's exports surged 11.6 percent from a year earlier in October and 9.9 percent in September, they were bolstered mainly by Christmas factors and exports of iPhones and iPads which are mostly produced in China, Shen said.

"The United States can hardly present a decent recovery next year because its aggressive easing policies in the past few years made its economy numb to stimulus, and the European Union is no better," Shen said. "You can look at the emerging markets like Singapore, which posted a negative growth rate in the third quarter and reminded us to stay cautious."

At the China Import and Export Fair, or Canton Fair, held last month, the number of visitors fell more than 10 percent from the spring event in May, and the value of signed deals, mostly short-term orders, fell 9.3 percent, foreboding future hardship for Chinese exporters.

Li Xunlei, deputy chief executive officer and chief economist at Haitong Securities Co, said another threat comes from excessive expectation of urbanization.

"China's urbanization may not create so much consumption and investment as people expected because farmers' income has not been raised accordingly although they live an urban life," Li said.

Both economists and other speakers said the only way to sustain China's growth is to push forward political and economic reforms, limit the role of government in economic activities, and give a free rein to market forces.

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