By Michael Forsythe - Nov 13, 2011 5:00 PM GMT+0700
Chinese participants at the Asia- Pacific Economic Cooperation forum in Honolulu expressed confidence in their nation’s economic prospects, with President Hu Jintao pushing for increased imports as a means to balance the economy and foster global growth.
After Hu spoke yesterday, two of China’s best-known economists, International Monetary Fund Deputy Managing Director Zhu Min and National Economic Research Institute Director Fan Gang, said the country’s economy was heading for a “soft landing” as growth slows. They cited lower inflation and bad debts at banks, and what Fan said were timely measures to avoid a bubble in the property market.
“It has become ever clearer that the Chinese economy is moving to a soft landing,” Zhu said. “The Chinese economy today is really moving to an inflection point, moving to more services and capital-intensive economy.”
Zhu and Fan, speaking on the same APEC panel, said economic expansion would slow from the 9.1 percent growth in the third quarter of this year, with Fan saying sustainable growth in gross domestic product was about 8 percent. Their forecast for a soft landing is in contrast with some observers including hedge fund manager Jim Chanos, who has forecast since at least February 2010 that the property market will slump, saying that China is on a “treadmill to hell” because of its reliance on real estate for growth.
Hu told business executives that China will seek to boost imports in part to help stimulate economies around the world.
Trade Surplus Critics
“We must be firmly committed to maintaining growth and promoting stability, with a special emphasis on ensuring strong growth in order to add momentum to the economic development in the Asia Pacific and beyond,” Hu said. China will “focus more on increasing imports while maintaining a stable level of exports.”
China, the world’s biggest exporter, has been the target of critics for its large trade surplus with the U.S., the world’s biggest importer. China’s overall trade surplus has been declining as imports, including Porsche Automobil Holding SE (PAH3)’s Cayenne sport-utility vehicles and iron ore from Rio Tinto Plc (RIO), have increased along with rising incomes and a nationwide surge in construction spending.
China’s exports rose at the slowest pace in almost two years in October as Europe’s deepening debt crisis crimped demand. Overseas shipments from the world’s second-largest economy rose 15.9 percent from a year earlier, customs bureau data released Nov. 10 showed. The trade surplus was $17 billion, lower than all 24 estimates in a Bloomberg News survey. Imports climbed a more-than-forecast 28.7 percent.
Inflation Slows
China’s inflation cooled in October, home sales fell and industrial output grew at the slowest pace in a year, adding pressure for measures to support growth in the world’s second- biggest economy.
Consumer prices rose 5.5 percent from a year earlier, the least in five months, the statistics bureau said Nov. 9. Housing transactions slid 25 percent from September, the bureau’s data showed.
Chinese business leaders conveyed the message that worries about a sharp downturn in the economy were unfounded.
Bank of China Ltd. (3988) Chairman Xiao Gang said the bank had controlled lending to local-government investment vehicles, whose ability to repay debt is a source of concern for the government and international investors. He told reporters at APEC that the lender, the country’s third-biggest by assets, had controlled lending to local governments. The bank said it had 531.5 billion yuan ($83.8 billion) in loans to such entities at the end of June. Xiao said much of the debt was to highway companies that had steady revenue streams from tolls.
‘Major Challenge’
“Their toll collections are a guarantee that they’ll repay their debt,” he said.
A government audit released in June said that more than 6,000 local government financing vehicles around the country had total debt of 10.7 trillion yuan as of the end of last year. Nearly a third of China’s local government financing vehicles are losing money, according to a study published in September in the magazine of the country’s official bond clearing house.
Still, Hu said “unbalanced, uncoordinated and unsustainable development poses a major challenge to China.” The country’s wealth gap is rising, food prices rose 11.9 percent in October from a year ago and investment makes up more than 40 percent of the economy.
“It will be very difficult to say for the time being that the Chinese consumer will save the world,” Zhu said. “China invests too much and it consumes too little.”
To contact the reporter on this story: Michael Forsythe in Honolulu at mforsythe@bloomberg.net
To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net
Posts
No comments:
Post a Comment