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"Double Dip" Recession Unlikely in China in H2: Report

iconJul 26, 2010 09:39
Source:SMM

BEIJING, July 26 -- China's economy is unlikely to see a "double dip" in the second half of this year, and the economic growth for the remaining six months is expected to surpass 9 percent, according to a Bank of Communications report released Saturday.

China's economic growth will slow down in the next half year, while consumer prices would fall from its peak, said the nation's fifth largest commercial bank in a report on the outlook of China's economy for the second half of 2010

"For China, it is never a recession unless the economic growth drops below 7 percent," said Lian Ping, chief economist with the Shanghai-based bank.

The growth is sustainable and healthy for the economy as the growth rate stays around 9 percent, he said.

China's exports, a major force driving the economic growth, would continue to rebound in the second half, and the growth for the entire year would stay above 20 percent, according to the report.

For the latter half of 2010 consumption is to grow by 18.5 percent from a year ago while investment growth will drop steadily to about 21 percent due to government support to the private sector and strategic emerging industries, it said.

Increasing labor costs, resources and food prices is expected to push up China's consumer prices, but the growth would be restrained in the second half due to the slowing money supply and eased imported inflationary pressures, it said.

China's gross domestic product (GDP) expanded 11.1 percent in the first six months of this year from one year earlier, data from the National Bureau of Statistics (NBS) showed.

China's consumer price index stood at 2.6 percent in the first half of 2010, according to the NBS, while retail sales and fixed asset investments grew 18.2 percent and 25 percent year on year, respectively.

China would maintain a stable monetary policy for the rest of the year since the global economic condition is still complicated, and an interest rate hike is unlikely to be seen, said the report.

The bank estimated that new loans for the entire year would stand between 7 to 8 trillion yuan (1.03 trillion to 1.18 trillion U.S. dollars).

The bank also forecasted in the report that the Chinese government would remain tough with the property sector, but there is little possibility for additional curbs on the market. Property investment would largely fall, but there will not be a significant decline in property prices.

Lian suggested that the Chinese government pay attention to the possible cumulative effect of policies on the economy and keep market liquidity at a reasonable level.

 

China economy macroeconomy
double dip

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