China’s economic growth in 2012 may drop below nine per cent for the first time in a decade, a senior Chinese foreign exchange official has said, underlining the gloom in Beijing over the deteriorating health of the global economy.
But Huang Guobo, chief economist at the State Administration of Foreign Exchange, China’s currency regulator, told a forum that policy would remain focused on controlling inflation in coming months.
That echoed comments last week by premier Wen Jiabao, who said inflation is unacceptably high.
“The Chinese economy is facing serious challenges despite strong growth,” Huang said. “The weakening global demand for Chinese exports will be a challenge…Next year, if the situation continues, China’s growth rate may fall below nine per cent.”
Huang is not the first of China’s many government economists to forecast slower growth. But his statement could signal a strengthening view in the government that growth in the world’s second-biggest economy is moderating.
Wang Jian, an economist affiliated with China’s National Development and Reform commission, known for relatively bearish views, told local Chinese media at the weekend that China’s growth could fall below eight per cent in the first half of 2012.
The outlook would not be welcomed by policymakers elsewhere because China’s growth during the global financial crisis played a key role in underpinning the world economy.
China’s economy expanded in 2010 by 10.3 per cent and during the global crisis years of 2008 and 2009 maintained annual growth of more than nine per cent.
The last sub nine-per cent expansion was in 2001, when GDP rose by 8.3 per cent.
China’s economy relies heavily on demand for its exports from the likes of Europe and North America, so financial markets are pricing in a slow down.
A Reuters poll in July showed analysts expect China’s economic growth to slow from 9.3 per cent this year to 8.8 per cent next year.
Such a slowdown would be within Beijing’s threshold. The country’s five-year economic blueprint allows for growth of seven per cent a year on average through to 2015.