Business

Wednesday June 24, 2009

China economy in right direction


BEIJING: The Chinese economy is headed in the right direction, but the foundations of the recovery are not yet solid, Su Ning, a vice-governor of the People’s Bank of China, said yesterday.

Speaking at a mergers and acquisitions conference, Su said he hoped China would be the first major economy to emerge from the global crisis.

“The overall situation is stabilising and moving in the right direction,” he said.

But he cautioned that the pick-up was still not firmly anchored and expressed particular concern about the “grim” international environment for Chinese exporters as the two-year-old financial crisis continues to take a toll on global growth.

Home buyers gather at a property fair in Jinan. China’s economy is stabilising but the foundations of its recovery are not yet solid — AFP

The World Bank also cited poor prospects for exports – and for private investment – when it cautioned last week that a rapid, broad-based recovery was unlikely even as it marked up its forecast for 2009 gross domestic product (GDP) growth to 7.2% from 6.5%.

A clutch of banks, including Standard Chartered, Barclays Capital and Royal Bank of Canada, have also raised their forecasts for China’s GDP growth in the past week following statistics for May that, except for trade, were generally robust.

The May data showed the economy benefitting from a four trillion yuan (US$585bil) government stimulus package as well as a loose monetary policy that has led to a burst of money and credit growth.

In the first five months of the year, banks extended a record 5.84 trillion yuan in loans, exceeding the minimum target set by the government of five trillion yuan for all of 2009.

“It has provided a very good environment for companies to overcome their difficulties and for the economy to adjust,” Su said of the central bank’s monetary setting. — Reuters


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