From Overseas Press

Economists see China's growth peaking

Updated: 2010-05-11 11:27
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Economists believe that China's growth momentum is starting to peak as the impact of stimulus spending wears off and Beijing steps up efforts to rein in property speculation and other excesses, as indicated by a raft of monthly economic data this week, said an article published in the Wall Street Journal on May 10.

Tao Wang, Beijing-based economist for UBS, was quoted as saying that the April industrial production reading is likely to be just 18%. What is more, she underlined that the year-on-year growth figures, which benefit from comparison with the weakness of China's economy in early 2009, obscure the fact that growth already appears to be slowing from month to month. "Things are not yet showing very obvious weakness at the moment, but we are at the peak of growth right now," Wang said.

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Duncan Wooldridge, chief Asia economist at UBS in Hong Kong, deemed that the current leading indicators are confirming that China's economy is going to end up with a slowdown in the second half of the year. He called it a 'midcycle correction in growth,' rather than a 'deterioration that ends in recession.'

Similarly, Standard Chartered predicted in the article that growth in China's gross domestic product in the second quarter would slow to 11% compared with a year ago, from 11.9% in the first quarter, and decelerate further to 9% in the third quarter and 8% in the fourth quarter.

"Any slowdown seen in the data, coupled with heightened external risk as the euro debt crisis shows no signs of abating," concluded the article, "may mean that China will continue to hold off on the most potent tightening measures in its arsenal: higher interest rates or an exchange-rate appreciation for the yuan."