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Slower Growth Won't Spark 'Second Dip'

Further Stimulus Moves Are Not Required, Say Economists

BEIJING, Sep. 9 -- China's economy is not at risk from a &quot;second dip&quot; despite the anticipated slower industrial growth of 10 percent in the second half of the year, government officials said on Tuesday.
Monthly industrial output has been growing steadily since April 2009, with growth peaking to 19.6 percent in the first quarter, compared with 5.1 percent during the same period of 2009. The growth, however, declined to 15.9 percent in the second quarter, said a report from the Ministry of Industry and Information Technology (MIIT).
Economic indicators like the purchasing managers index indicate that the growth pattern would change from &quot;moderate&quot; to &quot;slow&quot; during the second half of the year.
Full-year industrial output is expected to show a 13 percent growth over 2009, said Xin Guobin, head of the operation monitoring and coordination bureau under MIIT.
Xin said unlike last year, the growth in the second half has not been that high. &quot;Last year the growth figures shifted from low to high in the second half. It is difficult to achieve such a base for this year,&quot; he said. Growth accelerated in the fourth quarter of last year to nearly 17.9 percent, he said.
Real estate tightening policies and the restrictions for high-energy users coupled with an uncertain outlook for exports will crimp growth in the second-half, said Xin.
&quot;If we look at the combined growth rate of 2009 and 2010, the monthly growth rate has been hovering around 12 percent and 13 percent. That is a clear indicator of steady growth in industrial output,&quot; Xin said. &quot;In such a scenario, it is highly unlikely that a 'second dip' will occur in the economy.&quot;
The government had recently announced steps to reduce the energy consumption in industries like steel, chemicals, construction materials, non-ferrous metals, electricity and oil refineries as part of its efforts to reduce emissions and pollution.
Between January to July, the growth rate of these six industries dropped to 16.2 percent from 19.6 percent in the first quarter. That has, to some extent, helped the slowdown in industrial output.
The government last month said it would shutter outdated capacity in over 2,087 companies by the end of September.
The move, however, came in for criticism as some of the companies in the list had already stopped functioning.
&quot;The time is limited and the burden is heavy, but if everyone works hard, I am sure we will be able to achieve the target of reducing outdated power capacity by this month.&quot;
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