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GDP target in sight for 2013

By WANG XIAOTIAN in Beijing and WU YIYAO in Shanghai | China Daily | Updated: 2013-06-27 02:54

China's economic growth will pick up in the third quarter despite the recent liquidity crunch, and the government's full-year target of 7.5 percent expansion can be achieved, Bank of China Ltd said in a quarterly report on Wednesday.

The GDP growth rate will reach 7.8 percent in the third quarter, with 7.6 percent growth for the second half overall, according to the report.

The first-quarter expansion of the world's second-largest economy moderated to 7.7 percent amid sluggish external demand and soft investment.

"Acceleration of urbanization, a rally in consumption, an export recovery and base factors will support economic stability in the coming months," the bank said.

It added that if any new stimulus policy is introduced this year, growth might even reach 8 percent.

The report noted that manufacturers have nearly ended de-stocking and industrial output is expected to rise by 9.5 percent in the third quarter, slightly faster than in the second quarter.

But increased unemployment and financial risks such as shadow banking, local government debts and rising bad loans call for precautions, said Zhou Jingtong, a senior analyst at BOC.

"Employment is a lagging indictor for the overall economy. As exports dive, we forecast deterioration in unemployment if the economy continues to falter, which calls for an increased role for fiscal policy."

Investment in infrastructure may help the economy recover in 2013, with fixed-asset investment in infrastructure up some 30 percent year-on-year in the first half, said Pu Yonghao, regional chief investment officer for Asia Pacific at UBS Wealth Management.

"However, China's economic growth may continue to slow in the second half of 2013, according to statistics for power consumption and freight loading, which measure real economy activities," Pu said.

Exports in the second half may not help, while the real estate industry faces critical challenges, he said.

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