Li Daokui, a former adviser at China’s Central Bank, the People’s Bank of China (PBOC), and now the head of the Economic Research Center at the Tsinghua University, has cut China’s gross domestic product (GDP) forecasts amid weakness in the property market, Bloomberg reports.
China’s GDP will expand 7.4% in 2014, down from a previous estimate of 7.6%, and will slow further to 7.3% in 2015, Li said, as weakening property demand will drag on economic growth.
“The property industry, which has been a traditional driving force for the Chinese economy, has lost power and is expected to remain weak,” Li said.
Yesterday, Chinese Premier Li Keqiang and PBOC Chief Economist Ma Jun both ruled out the possibility of large-scale stimulus or a “hard landing” for the Chinese economy.
Premier Li Keqiang reiterated that China is still expecting economic growth around 7.5% in 2014 during a speech yesterday in Hamburg, Germany.
China could exceed or miss its growth target, however the nation doesn’t “face a hard landing as some say,” Premier Li said in a speech yesterday.
The slowdown in China’s real estate is putting downward pressure on the nation’s economy and that some further deceleration in the sector could be seen due to weak public sales, PBOC’s Ma told a panel on the sidelines of the IMF and World Bank fall meetings yesterday in Washington.
“Although we worry about some downside risk like the real-estate slowing down and so on, there are also growth engines, including the service sector in general, the Internet in particular … and healthcare is rising very rapidly,” Ma said yesterday.
Chen Dongqi, the Deputy Director of the research arm of the National Development and Reform Commission (NDRC) said that China’s growth could slow to 7.1% in 2015, from an estimated 7.4% in 2014, Bloomberg reported.
In the event that China’s economic growth should slow to a range of 6.5% to 6.8%, the Chinese government could still opt for monetary policy tools including “benchmark interest rates and required reserve ratio,” Chen said, speaking at a forum in Beijing on Sunday, according to Bloomberg.
In addition to using monetary policy tools to tackle slowing growth, the Chinese government could also dispense resources to boost investment in the railway sector to help cushion a slowdown, Chen added, according to Bloomberg.
Source: Bloomberg
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