Mon, May 21, 2012 - Page 11 News List

Eyeing slowdown Beijing unveils growth-boost plan

Bloomberg

Chinese Premier Wen Jiabao (溫家寶) said the government will focus more on bolstering growth, indicating policies may be loosened further as inflation moderates.

China will “place stabilizing growth at a more important position” while its government maintains active fiscal and prudent monetary policies, Xinhua news agency cited Wen as saying recently.

Wen’s remarks cited in the report, which did not mention concern about inflation, indicate the government may take more aggressive economy-boosting steps after last month’s data showed the slowdown may be sharper than expected. The central bank this month cut banks’ reserve requirement ratio for the third time since November to boost liquidity.

“Going forward, we expect a clearer easing in macro policy and a pickup in sequential growth,” Goldman Sachs economists said in a research note on Saturday, adding liquidity conditions will probably be loosened while approvals on new infrastructure projects could be accelerated.

The bank lowered its China economic growth forecast this year to 8.1 percent from its previous 8.6 percent, joining similar moves by other banks after last month’s data trailed expectations.

China’s exports and imports last month expanded the least since the global financial crisis. Industrial output rose at the slowest pace since 2009, after government credit tightening last year to cool property markets.

More signs of weakening demand have emerged as home prices fell in a record number of Chinese cities last month and car dealers posted inventories that foreshadowed deeper price cuts.

The country may expand at its slowest pace in 13 years this year, a Bloomberg survey showed, with analysts forecasting a further 100 basis-point reduction in the reserves ratio by year’s end.

At the same time, governmental concern about inflation could ease as consumer prices climbed 3.4 percent from a year earlier last month, after surging to 6.5 percent in July.

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