Goldman Sachs Group Inc cut its growth forecast for China this year to 10.1 percent from 11.4 percent as government restrictions on lending and real estate slow expansion in the world’s third-largest economy.
Asian stocks fell after the report fanned concern the global recovery is losing steam. The US investment bank joins BNP Paribas, Macquarie Securities Ltd and China International Capital Corp (CICC, 中國國際金融) in reducing estimates for expansion in the fastest-growing major economy.
Meanwhile, the government raised its growth estimate for last year by 0.4 percentage point to 9.1 percent.
A third of China economists may reduce their “overly bullish” forecasts for this year and next year in coming weeks mainly due to the government’s property tightening measures, Bank of America-Merrill Lynch economist Lu Ting (陸挺) said in a note to clients on Wednesday.
The slowdown will help avert overheating and ensure the economy cools toward a “healthy soft landing,” Deutsche Bank economist Ma Jun (馬駿) said yesterday.
AGGRESSIVE TIGHTENING
“China’s growth has been slowing down sharply and the tightening measures we saw in April on property have been quite aggressive,” Isaac Meng (孟原), a Beijing-based economist at BNP Paribas, said in a phone interview yesterday.
The government won’t “launch easing measures in the short term as the major concerns, especially about the property bubble, haven’t been fully addressed,” he said.
BNP this week reduced its growth forecast for this year for China to 9.8 percent from 10.5 percent.
Macquarie cut its estimate to 9.5 percent to 10 percent from a previous 10 percent to 10.5 percent last month and CICC said in May that growth would likely ease to 9.5 percent from a previous estimate of 10.5 percent.
Manufacturing in China, the world’s biggest maker of computers and mobile phones, expanded at the slowest pace in 16 months, a survey of purchasing managers showed yesterday.
Stocks declined as the report added to concerns that a cooling China combined with austerity measures in Europe and slower growth in the US may undermine the global recovery.
Still, economists say the moderation in China’s growth is a sign that the government is moving the country to a more sustainable pace of expansion after a 4 trillion yuan (US$591 billion) stimulus package drove an 11.9 percent rebound in the first quarter.
“The June PMI data confirms that the manufacturing sector still remains in a solid expansion stage,” Sun Mingchun (孫明春), a Hong Kong-based economist at Nomura International, said in a note yesterday.
“If the decline does not continue for too long, it should prove a healthy correction that reduces the risk of the economy overheating,” Sun said.
“The momentum of growth has moderated as expected, but we do not see a sharp slowdown in China,” Liu Ligang (劉利剛), economist at Australia & New Zealand Banking Group Ltd, said in Hong Kong. “With this moderation, this will be a good thing for policymakers that they don’t have to tighten excessively.”
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