BEIJING (AFP) ― China’s economic growth jumped to 7.8 percent in the third quarter, analysts polled by AFP forecast ahead of the release of the figures Friday, the first acceleration in the world’s second-largest economy for almost a year.
The median forecast in a survey of 11 economists saw growth ahead of both the 7.5 percent logged in the April-June period and 7.7 percent in the first three months of the year. “Both the confidence and demand within the country have improved,” said Sun Junwei, a Beijing-based economist with HSBC. “Therefore, we feel the economy is on track to have a mild recovery.”
The jump was mainly a result of government stimulus since late June that featured increased rail and urban fixed-asset investment, tax cuts and loose monetary policy, economists said.
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A shopper counts Chinese yuan banknotes as he shops for fruit and vegetables at a market in Shanghai. Bloomberg |
The measures were taken after the growth in gross domestic product slowed for two straight quarters and following a 7.7 percent expansion for all of 2012 ― the worst performance since 1999.
“The economy may have stabilized and rebounded by a small margin thanks to the so-called mini-stimulus since June,” said Li Ruoyu, a Beijing-based economist with the State Information Center, a government think tank.
But many of those polled said growth may now have peaked and is likely to ease in the coming months, as the comparable figures in the second half of 2012 were relatively high.
Beijing ― which has set a growth target for this year of 7.5 percent ― is unlikely to have room for more stimulus measures, with tightening possible in some sectors, they added.
“Looking forward, we believe such growth will be difficult to sustain, as real estate tightening measures may return, and an adverse base effect ... may cap upward momentum,” Shen Jianguang, Mizuho Securities analyst in Hong Kong, wrote in a research note.
Signs a recovery is waning have already emerged, highlighted by a surprising drop in exports last month and a sharply slower increase in manufacturing activity, which is a barometer of the health of the overall economy.
Room for further monetary loosening is limited due to factors including rising inflation and already excess market liquidity, according to analysts. At the same time skyrocketing local government debt and slowing fiscal revenue growth are restricting further tax incentives, they say.
China’s new leaders have so far avoided taking aggressive pump-priming measures similar to those seen in response to the global financial crisis.
They have proclaimed a long-term goal of rebalancing the economy and since coming to power as Communist Party chief in November and state president in March, Xi Jinping has placed less emphasis on the traditional growth drivers of exports and investment, and more on consumer spending.
“We will accelerate the shift in the growth model, intensify economic restructuring and make vigorous efforts to boost domestic demand,” Premier Li Keqiang said last month.
Speculation has been growing that economic reforms will be announced at a key plenary meeting of the ruling Communist Party scheduled for next month.
“The consensus is that unlike in the past, what is desired is balanced rather than high-speed growth,” said Yao Wei, Societe Generale economist in Hong Kong.
But Sun of HSBC expected reform plans to be laid out at the November meeting would pave the way for expansion in the longer term.
“The key is to release the investment and selling demand of the private sector,” she said. “We hope the reforms will be a critical driver for sustainable economic growth in the future.”
