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News Analysis: Massive China economic stimulus unlikely

English.news.cn   2014-03-31 21:14:16

BEIJING, March 31 (Xinhua) -- With further shrinkage in China's growth on the cards in Q1, reform will be used to fend off economic slowdown rather than an economic stimulus, economists have said.

Given the increasing downward pressure, analysts have projected GDP growth slowing to below 7.5 percent in the Jan.-March period. Zhang Liqun of the State Council's development research center sees the slowdown as a result of gloomy market sentiment since the final quarter of 2013, when enterprises de-stocked in a pessimistic climate.

Tang Jianwei, a researcher at the Bank of Communications, lowered his growth estimate to 7.3 percent, stressing poor demand at home and abroad.

The latest evidence came from the HSBC's preliminary manufacturing purchasing managers' index (PMI) for March, which dipped to an eight-month low, the third straight month of contraction. Other economic indicators are also bleak, including an unexpectedly large trade deficit in February and the lowest increase in fixed asset investment for 13 years.

The official reading of GDP for the first three months of this year is scheduled for release on April 16.

The slowing pace, although denting market faith, is still in the range set by the authorities. In the annual "Two Sessions" at the beginning of this month, the central government decided to keep the growth target for 2014 unchanged at around 7.5 percent and the target for inflation around 3.5 percent. The government will not step in with strong action, provided the range is not breached.

Zhang calls the expected 7.3 percent growth "normal", as the rate has been fluctuating around 7.5 percent since 2012, thus taking any massive stimulus out of the reckoning.

Echoing his words, an unnamed economist from the Academy of Macroeconomic Research said the situation is different from those of 1998 and 2008 and the economy has outgrown stimulus measures. Proactive fiscal policy and prudent monetary policy are more sustainable growth modes without the side-effects of a widening deficit and rising inflation.

To tackle the downward trend, China is more likely to rely on reform in 2014. Zhang and Tang expect the government to ease private investment restrictions and simplify administrative procedures for small start-ups, both as part of the mixed-ownership drive and to increase market vitality.

The government will also step up infrastructure construction, renovation of dilapidated residences and development of central and western China, Tang added.

Premier Li Keqiang showed his faith in economic growth at a conference on March 26, citing successful experiences last year and pledging targeted measures soon.

China will walk out of the bleak situation in the second and third quarters of this year, Zhang said, as reform gradually takes effect.

Related:

China's listed firms make optimistic Q1 forecast

BEIJING, April 9 (Xinhua) -- Of China's listed firms, 391 expect their performance to improve in the first quarter of this year, representing over half of companies that have released preliminary reports, the China China reported Wednesday.

Of the companies, 312 forecast their profits to increase, 40 said profits will increase for two straight years, and 39 expect they will stop losses, data from Wind Info showed. Full story

China increases 2014 railway investment

BEIJING, April 9 (Xinhua) -- China will increase railway fixed asset investment to 720 billion yuan (117.09 billion U.S. dollars) in 2014, Sheng Guangzu, general manager of the China Railway Corporation (CRC), has revealed.

In Wednesday's People's Daily, the flagship newspaper of the Communist Party of China, Sheng said the corporation was increasing investment to meet demand. Forty-nine new projects and over 7,000 kilometers of new railway lines will be put into operation this year. Full story

China's listed firms make optimistic Q1 forecast

BEIJING, April 9 (Xinhua) -- Of China's listed firms, 391 expect their performance to improve in the first quarter of this year, representing over half of companies that have released preliminary reports, the China China reported Wednesday.

Of the companies, 312 forecast their profits to increase, 40 said profits will increase for two straight years, and 39 expect they will stop losses, data from Wind Info showed. Full story

 

 

 

 

 

 

 

Editor: Fu Peng
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