China's slowdown likely to linger, says researcher

The mainland's economic slowdown may last longer than during the global financial crisis because of worsening external demand and limited lending to smaller companies, a state researcher said.

Growth may slow for a ninth consecutive period to below 7 per cent in the first quarter, said Yuan Gangming, an economist with the Chinese Academy of Social Sciences.

Yuan, who formerly headed CASS's Office of Macroeconomic Research in the Institute of Economics, forecast 7.4 per cent expansion in the third quarter and 7.2 per cent in the fourth.

The slowdown may pressure the next leaders to step up stimulus efforts. A report on Thursday showed China's manufacturing may contract for an 11th month, and Yuan said the central bank had been too focused on inflation at the expense of growth.

"The slowdown will definitely extend into the first quarter of next year," said Yuan, who advises the government without being directly involved in policy making. "That will provide a good starting point for the new generation of leadership to make a turnaround, because things can't get worse."

However, in a survey, economists see growth rebounding in the next quarter. The median estimates for expansion were 7.4 per cent for the third quarter, 7.7 per cent in the fourth quarter and 7.9 per cent in the first period of 2013.

The People's Bank of China has held off from easing after cutting interest rates in June and July and lowering lenders' reserve requirement ratio three times from November to May.