Experts say 8% growth possible

More than half of China’s leading economists think the country’s GDP growth may still reach 8 percent this year, fueled by the government’s recent efforts to boost the economy, a survey by a major website showed on Monday.

According to the NetEase survey, which covered 100 economists and scholars, 52 percent of interviewees expected China’s GDP growth to reach 8 percent.

However, 37 percent held the opposite viewpoint. And 11 percent said it was too difficult to judge the overall situation.

Despite sluggish economic data in the past few months, the majority of economists said the government’s efforts to stabilize the economy would have the required effect.

The National Development and Reform Commission, China’s top economic planning agency, last week announced the approval of 25 new urban rail transit and intercity rail line projects with a total investment of more than 800 billion yuan ($127 billion).

The projects, most of which will take three to eight years to complete, are aimed at injecting vitality into the country’s slowing economy and improve the investment environment.

Just over half 55 percent of the surveyed economists were optimistic about China’s economic prospects, saying that the situation would improve in the second half of the year.

But economists at foreign institutions are not so optimistic.

In a recent report, UBS revised China’s GDP growth forecast downward from 8 percent to 7.5 percent in 2012, and from 8.3 percent to 7.8 percent in 2013.

“Declining exports and imports may pose the biggest challenge for China’s economy in the coming months,” Wei Jianguo, former vice-minister of commerce, told China Daily. He said the country might find it hard to hit its trade growth target of 10 percent for the year.

“September and October may be the worst time for China’s exports as it is the key season for exporters to grab Christmas orders,” said Wei, adding that small and medium-sized enterprises may have a really difficult time.

“Now is the best time for the central government to launch policies, such as tax cuts, to support export-oriented SMEs,” Wei said.

Early in 2012, most economists thought China’s export growth would bottom out in the first quarter and then stabilize. However, as the eurozone sovereign debt crisis dragged on, the negative impact on the real economy increased throughout the year, and the recovery in US growth has also faltered since the spring.

Wang Tao, China economist at UBS AG, said: “For the fourth quarter this year, we expect a somewhat intensified implementation of the existing policy measures, including an increase in infrastructure investment, but a major new stimulus is unlikely unless the economy worsens sharply. “Therefore, we now think the recovery will be more modest than previously expected.”

Around 73 percent of the surveyed economists said China is unlikely to roll out a large-scale economic stimulus plan like it did in 2009.

The previous round of measures has been criticized for being excessive, worsening some structural imbalances, and leading to debt problems at the local government level. Therefore, the threshold for policy action has become higher and the magnitude of policy support has been constrained.

Liu Heng, a professor at the Central University of Finance and Economics, said although it is unlikely that the central government will launch a large-scale stimulus package, it may take other measures to boost the economy.

Jing Xuecheng, former research bureau chief of the People’s Bank of China, said there is a possibility that local governments may launch stimulus measures.

According to research by UBS, the economic slowdown has been gradual, unlike the sudden collapse in late 2008, and has not led to significant labor market pressures.

The assessments of the current economic situation by different agencies may not have been clear and uniform enough to form strong support for quicker and more substantial policy action.