World economists and executives hold prudent attitude towards China's economic recovery when interviewed by Xinhua during the Membership Meeting of Institute of International Fund (IIF) from June 10 to June 12.
Louis Kuijs, Senior Economist for World Bank, told Xinhua that it is too early to say if China's economy has really bottomed out amid a difficult global environment.
"It is difficult to claim that China's economy has bottomed out unless we see dramatic growth," said Kuijs.
With the help of soaring fiscal outlays and accommodative monetary policies, Kuijs said, the country has managed to achieve an amazing 6-7 percent growth so far, but the export sector, a key engine for China's economic growth, hasn't strongly indicated the stabilization of recovery after slumping by 20.5 percent in the first months. These could shave off two or even more percentage points of China's GDP growth.
China's exports and imports shrank for the seventh month in a row in May, with export falling 26.4 percent from the same period a year ago to 88.758 billion U.S. dollars, and imports down 25.2 percent to 75.37 billion U.S. dollars, according to the General Administration of Customs (GAC).
Earlier, Kuijs he told the IIF meeting China's growth is hardly different from the world and the continuity of recovery depends on the economic outlook of whole world. "With world demand weak and a lot of spare capacity available globally and also in China, there is a lot of downward pressure on manufacturing output."
When asked how long it will take for China's economy to bottom out, Kuijs insisted that "more data is still needed" given the subdued prospects for the world economy.
He also told Xinhua that the prospects for the coming year or so are that growth will remain respectable but is unlikely to rebound to the very high single-digit rates of growth that China has been used to unless the world economy recovers.
Louis Kuijs' view was echoed by Michale Buchanan, Managing Director and Chief Asia Pacific Economist, Goldman Sachs, who predicted "China's economy will bottom out in November."
"We think China is recovering faster than the other countries because of the combination of the size of policy stimulus and the fact that credit crisis has very limited impact on China's economy. However, the increase was low over the last four months, and I believe the economy will bottom out in November."
China's first-quarter GDP increased 6.1 percent over the previous year, which may be a strong performance in the global context but is the lowest rate for China in many years. China's urban fixed-asset investment in the first five months rose 32.9 percent year on year. However, the robust growth was mainly a result of investment on government-sponsored infrastructure projects.
Buchanan still expressed his optimistic attitude towards China's recovery, "In our view, the growth rate at the moment in China quarter on quarter is very strong. What we care most is not the year on year growth but sequential. We think it is already very strong. "
"China's economy has already bottomed out from my point of view and will see a V-shaped recovery this year. Currently, it is climbing on the right side of 'V'," said Robert D. Hormats, Vice Chairman of Goldman Sachs (International) when asked by Xinhua.
Hormats stated that the 4 trillion yuan stimulus package launched by Chinese government to boost domestic demand and provide support to 10 key industries have started to yield successful results. Banks also are active to lend money to infrastructure companies. Those factors will lay solid foundation for the continuity of China's economic recovery.
At the same time, he pointed out the biggest challenge facing China's economy. "China needs to make more efforts to expand domestic demand, which is necessary to offset the continuous slump of export, an engine for Chinese overall economic growth."
(Xinhua News Agency June 15, 2009)
