"China faces major uncertainties even though it rebounded strongly from the latest financial crisis aided by its huge treasure chest, World Bank President Robert Zoellick said in a speech on [Sept. 28]....Noting that China's rapid recovery was fueled by an expansion of credit, he said 'this flood is now easing, and authorities are likely to limit it further for fear of effects on asset prices, asset quality, and eventually general inflation.'... He said Chinese leaders recognized the risks of the continued dependence of China and other emerging economies on export-led growth...." [Agence France Presse/Factiva]
BEIJING– Despite the global recession, China’s economy grew 8.7 percent in 2009, and the growth momentum continued in the first months of 2010, according to the World Bank’s latest China Quarterly Update released [Mar. 17].
The Update, a regular assessment of China’s economy, finds that massive investment-led stimulus was key in driving the economy last year. But real estate investment gained prominence more recently and household consumption growth has held up very well.
Exports declined in 2009 as a whole, even as China gained global market share. With imports strong, net external trade was a major drag on growth in 2009 and the external current account surplus declined sharply. Exports rebounded strongly through 2009, though, and exceeded pre-crisis levels in early 2010. In a heated real estate market, surging property prices triggered policy measures to expand supply and curb speculation.
“We project 9.5 percent GDP growth for this year, with a shift in the composition,” said Ardo Hansson, Lead Economist for China. “Government-led investment is bound to decelerate. But, exports are likely to continue to recover amidst a pick up in the global economy, real estate activity is likely to grow strongly this year, and consumption should remain solid.”
Inflation is on course to be significant in 2010, after being negative in 2009. But, with global price pressures likely to be subdued amidst large spare capacity internationally, China’s inflation is unlikely to reach high rates in 2010. We expect the external surplus to remain broadly unchanged this year.
Turning to policies, “the macroeconomic policy stance will have to be tighter this year than in 2009,” said Louis Kuijs, Senior Economist and main author of the Update. “Unlike in most other countries, overall output in China is close to potential. Thus, China needs a different macro stance than most other countries.”
"The recovery in China's economy gained new impetus on [Oct. 14] with figures showing that the decline in exports and imports slowed sharply in September. The Chinese authorities said that exports had fallen 15.2 percent in September compared to the same month last year, against a 23.4 percent decline in August...." [Financial Times]