22 October 2009 07:26 [Source: ICIS news]
By Judith Wang and Dolly Wu
SHANGHAI (ICIS news)--China looks set to beat its 8% growth forecast this year as its economic expansion continued to accelerate largely due to heavy government pump-priming, analysts said on Thursday.
In the third quarter, the world’s third biggest economy grew a full percentage higher at an annual rate of 8.9% from the previous three months, bringing the average growth for the January-to-September period to 7.7%, based on data from the National Bureau of Statistics (NBS).
“Good sales in the automobile and housing sectors drove up consumption in many industries such as construction materials and furniture, boosting the economic growth and strengthening people’s confidence,” said Dong Xian’an, an analyst from Shanghai-based brokerage Industrial Securities.
The country could churn in a stronger GDP growth of between 9.5-11.0% in the last quarter of the year as exports would likely turn positive in November, analysts said.
“Aided by the recovery of
Restocking from the country’s customers in the US and Europe should help exports finally post growth after languishing in the red for most of the year, said Li.
Dong of Shanghai-based brokerage Industrial Securities was more upbeat, predicting the Chinese economy would pull a 10-11% growth in the last three months of 2009.
The global financial crisis that struck late last year has put a brake on China’s rapid economic expansion, with the economy logging its slowest growth ever in the March quarter of 2009 at 6.1%.
Growth has since accelerated to 7.9% in the June quarter and grew at a faster pace in the third, as declines in exports have eased, while the government kept to its policy of aggressive lending to businesses.
“We should continue to push domestic demand to boost China’s economy. We can say that the Chinese economy is rebounding gradually,” Li Xiaochao, spokesman of NBS said.
China’s CNY4,000bn ($586bn) fiscal stimulus package announced in late 2008 continued to work its way into the economy, analysts said. The package was implemented to prevent a further deceleration in China’s GDP growth and maintain this year’s expansion at 8%.
“Investment is still the key factor to spur the economic growth in the next few months, and it will keep the ongoing fast growth rate into the fourth quarter,” said Li Hongrong, an analyst from Shenzhen-based brokerage Ping An Securities said.
“The urban fixed asset investment is slated to grow above 30% in the fourth quarter,” Li said.
China’s urban fixed asset investment in the first three quarters rose 33.3% year on year to CNY13,318bn, NBS data showed.
Domestic consumption in China has remained buoyant, with retail sales rising at an annual rate of 15.1% to CNY8,968bn in the first three quarters of the year, based on the same data.
Manufacturing activities have also held well, with industrial output posting an 8.7% growth over the nine-month period compared to the same period last year, NBS said.
China’s economic recovery has not been accompanied by inflation threat as both its consumer price index (CPI) and producer price index (PPI) still registering falls.
Its average CPI was down 1.1% year on year in the first three quarters, while its PPI fell 6.5% year on year.
($1 = CNY6.83)
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