Chinese economy to slow down in last quarter
Agence France Presse
Shanghai, January 24:
China’s fast-paced economy is forecast to slow further in the fourth quarter of 2004, with growth expected to come in at 9.0 per cent or less as government curbs on investment bite, economists said on Monday.
Most analysts surveyed ahead of Tuesday’s gross domestic product figures release expected the frantic pace of growth to show more evidence that Beijing-led efforts to cool industries such as real estate, construction and autos were continuing to brake the economy as whole. Li Ruoyu, an economist at government think-tank State Information Center, forecast October to end-December GDP growth would be 8.7 per cent compared with 9.1 per cent in the third quarter. “Macro-economic measures are still taking effect and commodity prices have been falling,” Li said.
In the first half of 2004 the world’s fastest growing major economy saw GDP soar by 9.8 per cent in the first quarter and 9.6 per cent in the second as Beijing struggled to ensure provinces adhered to a mandated clampdown on easy credit.
Amid dizzying fixed-asset investment levels that expanded by more than 43 per cent in the first quarter, analysts said the amount of money that the government was spending on large infrastructure projects should continue to fall.
“The overall picture is further slowing in investment and moderation in growth while consumption is increasing,” said Citigroup economist Huang Yiping, who forecast growth of around 8.8 per cent for the three months to December. China’s fixed-asset investment in the first three quarters of 2004 grew by 27.7 per cent, compared to 28.6 per cent in the first half. By November, investment in Chinese cities had been trimmed to 24.9 per cent growth, following a rise in interest rates in October, the first in nearly a decade.
“It strikes me that a growth rate between 20 to 30 per cent for at least a couple of years, while not sustainable in the long-term, is manageable,” said Tim Condone, an economist at ING Barings. In December, the National Bureau of Statistics reiterated that they expected the overall economy to expand by 9.3 per cent in 2004, the same as in 2003.
Fixed-asset investment in China would rise 25 per cent year-on-year to 6.9 trillion yuan in 2004, while fourth quarter GDP was expected to show growth of around 8.5 per cent, they said. But some dismissed these figures as impossibly low.