Wen Jiabao

Growth to speed up, but dip still possible

PUBLISHED : Tuesday, 05 May, 2009, 12:00am
UPDATED : Tuesday, 05 May, 2009, 12:00am

The mainland's economic growth will accelerate to 7 per cent in the second quarter, but it may be too early to say the economy has turned the corner, according to two separate official sources yesterday.

Annual economic growth would rise from the first quarter's 6.1 per cent because of Beijing's massive fiscal and monetary stimulus programmes, the State Information Centre said in a quarterly report in the China Securities Journal.

Premier Wen Jiabao and top economic officials have recently stated with some caution that the country was showing signs of recovery.

They pointed to first-quarter data showing record bank lending, a surge in fixed-asset investment, solid growth in retail sales and a rebound in industrial production.

However, the cabinet's chief economist warned yesterday that it was still too early to say the economy had bottomed out.

Zhang Yutai, the head of the State Council's Development Research Centre, told the People's Daily the economy might dip again. 'We must prevent the economy from [hitting a] trough a second time,' he said, citing weak activity in the private sector, slow growth in personal incomes and continuing uncertainty in the global economy.

Mr Zhang said the government should still be prepared for the worst and be ready to introduce new and more forceful stimuli to achieve growth. However, the government was in no rush to do so, since the current economic performance was 'better than expected'.

'For now, the most important thing is to properly implement existing policies,' Mr Zhang told the Communist Party's official newspaper.

He was confident the government could achieve its target of 8 per cent growth this year, which it sees as the minimum for creating enough jobs to maintain social stability.

Most global institutions have forecast less than 8 per cent. However, tax cuts, huge spending on projects and record new lending by banks point to signs of recovery .