China has become an economic powerhouse in Asia and throughout the world. The nation's stimulus package far outstrips the US. The socialist nation places people before banks., a photo by Pan-African News Wire File Photos on Flickr.
China's Economic Growth Slowest In Nearly 3 Years
China’s economy grew 8.1% in the first quarter, after expanding 8.9% in the fourth quarter of last year, according to the country’s National Bureau of Statistics. Economists polled by Reuters had been expecting to see growth of 8.3%.
Today’s data showing the world’s second-largest economy growing at its slowest pace in nearly three years is prompting many analysts to say more policy support will be needed to achieve a soft landing.
Morgan Stanley said the ineffective delivery of policy easing has failed to translate the looser liquidity conditions in the inter-bank market to the real economy. The investment bank forecast that China’s economy would bottom out, in year-on-year terms, in the first quarter, while expecting to see a stronger rebound in growth in the second and third quarters.
That view was supported by data released yesterday indicating that Beijing had been loosening its monetary policy even more than had been expected in March. Chinese banks issued more than 1 trillion yuan in new loans ($160 billion), up from 710 billion yuan the previous month.
Within the next one or two quarters, Morgan Stanley says China’s central bank will cut the benchmark lending and deposit rates by 25 basis points at least once.
Stocks in Shanghai and Hong Kong were undeterred by the lower-than-expected GDP figure. The Shanghai Composite Index finished with a modest gain of 0.3%, while Hong Kong’s Hang Seng Index closed higher by 1.8%.
Premier Wen Jiabao had lowered China’s annual growth target to 7.5% last month, as the country seeks to correct its imbalances and maintain slower but more sustainable economic growth in the future.