Economists discuss China's accelerated GDP growth

Daniel Soh, economist at Forecast in Singapore

"Many positive developments have been observed of late. Investments from domestic private enterprise showed signs of picking up.

The composition of medium- and long-term loans to total loans rose. That, plus (the new) data, means that China's economic recovery is set to extend going forward, even when fiscal stimulus effects wane in the fourth quarter of 2009.

It's now clear that the fiscal stimulus package has offset the contraction in export activity.

We have revised our Chinese 2009 growth forecast to 8.1 percent."

Ben Simpfendorfer, China economist at RBS in Hong Kong

"I've just revised my full-year (GDP) forecast from 7 percent to 8 percent on this data. I had been expecting a much lower figure.

The important message here is that while the pace of growth is accelerating, the quality is deteriorating. Growth is too reliant on public investment and residential investment. It's not sustainable.

Retail sales figures are probably the poorest of the monthly data. It's nice to see they are stronger, but anecdotal information from department stores suggests they are stable to stronger.

Obviously I'd like to see more rebalancing (toward private consumption), but that's years away."

Hao Daming, senior economist at Galaxy Securities in Beijing

"GDP growth acceleration is partly driven by the increase in industrial production.

Investment is slower than expected, but I think the actual amount is about the same as in May.

Investment growth will accelerate in the third quarter and become even faster in the last quarter of this year.

The recovery is confirmed. The bottom was the fourth quarter last year.

The risk for next year is that investment growth will not be as fast as this year.

Real estate investment in 2010 will also slow down because of high prices. Inflation will not be a big issue.

The central bank will tighten monetary policies in the second half via credit quotas and open market operations.

New loans will be about 400 billion yuan each month in the second half."

Xing Ziqiang, analyst at CICC Securities in Beijing

"We can see that the economy is recovering very rapidly.

The 7.9 percent annual growth for the second quarter can be translated into an annualized quarter-on-quarter rate of 16 percent.

The government's stimulus policy played a dominant role in bringing up the economy.

Our calculations show that government policies, including the 4 trillion yuan stimulus package, contributed about 6 percentage points to the 7.1 percent reported for the first half."

(China Daily 07/20/2009 page2)