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Headwinds may buffet economic growth

By CHEN JIA in Beijing and HE WEI in Shanghai | China Daily | Updated: 2013-07-10 00:41

Economists said that in the second half of the year, if the US and Japan see strong recovery and there is no sudden crisis in the European Union to drag gross domestic product into contraction, China's exports and corporate earnings may improve.

But a report from Nomura Securities said it is more likely that the US will continue its long-term asset purchases up to the end of the third quarter and reduce purchases after this, which may support a stronger US dollar. Emerging markets, including China, may then see capital outflows.

A report by Fudan University and the Center for European Economic Research said China's real economy — the manufacturing and service sectors — has been far from a revival.

Fifty-four of 100 economists and researchers surveyed from investment banks and securities companies at home and abroad expect a fall in income for the steel, metal and machinery industries.

Sun Lijian, co-author of the report and professor at Fudan University in Shanghai, forecast a pick-up in manufacturing only on the premise that the US economy rebounds in the second half of the year, raising commodity prices.

Yao Wei, chief economist in China at Societe Generale, said the government is expected to maintain its policy stance, and the inflation rate may remain muted in coming months.

"The government is unlikely to resort to any quick reforms, which it has been resisting since last year. The trend of soft growth and muted inflation may well last in the near term," Yao said.

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