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SHANGHAI: China's economy may regain double-digit annual growth in the fourth quarter of this year, potentially bringing tightening closer to the horizon, a senior government economist said on Thursday. Economic data for industrial output, investment and credit in August all surprised on the upside, solidifying a picture of a solid recovery, despite words of caution from Beijing that officials need to remain vigilant on growth.
"The Chinese economy is rebounding actively, and it bottomed out in the second quarter. I have a very bullish outlook on the economy in the second half," said Chen Dongqi, vice-head of the macroeconomic institute under the National Development and Reform Commission (NDRC).
Chen told a conference that he saw a double-digit annual rise in gross domestic product in the fourth quarter bringing full-year growth to between 8 percent and 9 percent, meaning the government will exceed its target of 8 percent growth. More specifically, he laid out a set of conditions that he thought could prompt authorities to shift to a tighter monetary policy stance, from the current "appropriately loose" one. Beijing may have to consider tightening monetary policy if annual GDP growth exceeds 9 percent, consumer inflation exceeds 3 percent or export growth is above 15 percent.
On the government's proactive fiscal policy, Chen said there was no need to change direction. He did not specify whether all of those conditions would have to be met at once to prompt tightening, but even such guidance from government economists is rare. While annual GDP growth might be approaching the 9 percent range, consumer price inflation and export growth are still far away from the ranges Chen mentioned. The consumer price index fell 1.2 percent in August from a year earlier, easing from a 1.8 percent drop in July, but many economists expect it to return to positive territory towards the end of this year, partly because of a low base of comparison.
Exports fell 23.4 percent in August from a year earlier, extending a 10-month streak of falls from year-earlier levels, but again many economists expect growth to turn positive either later this year or early next year, in part due to the low base. |
