Uncertainty over China's growth lingers

Uncertainty over China's growth lingers

CHINA - Having met market expectations with its 7.5 per cent expansion in the second quarter of this year, China's economy is now under scrutiny for where it is headed in coming months and years.

Investors had breathed a sigh of relief on Monday that the world's No. 2 economy did not repeat the nasty surprise it sprung in the first quarter, when its 7.7 per cent expansion missed analysts' forecasts of 8 per cent.

Statistics official Sheng Laiyun also sought to boost confidence by declaring that China has the right conditions to meet its 7.5 per cent official target for the year. That would mean China just needs to average around 7.4 per cent in the next two quarters.

Still, a sense of uncertainty - and even unease - continues to linger amid growing signs that China's growth could keep moderating, not just for the rest of this year, but also well into next year and beyond.

Some analysts say growth could drop to 6.9 per cent next year, and between 3 per cent and 6.5 per cent in a few years' time.

Not that the new leadership has not given ample warning of this downward trajectory. "The top leaders have made clear on several occasions that they are prepared to accept and tolerate much slower growth so as to implement reforms," said Central University of Finance and Economics professor Guo Tianyong.

Finance Minister Lou Jiwei hinted last week that top leaders were prepared to tolerate growth rates as low as 6.5 per cent.

And many now expect Premier Li Keqiang to announce a lower gross domestic product target next year of 7 per cent at a top economic work conference in December, said Nomura economist Zhang Zhiwei on Monday.

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