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CHINA / National |
Morgan Stanley: China on journey to imported soft landing(Xinhua)
Updated: 2008-01-24 21:29 Morgan Stanley's Chief Economist for Great China Wang Qing said Thursday that the Chinese economy was expected to achieve a soft landing in 2008, aided primarily by a significant moderation in China's export growth due to weak external demand. Wang called the trend "an imported soft landing" during a press conference held in Beijing. China's National Bureau of Statistics (NBS) announced on Thursday that the country's gross domestic product (GDP) reached 24.6619 trillion yuan (US$3.43 trillion) in 2007, up 11.4 percent year-on-year, and its consumer price index (CPI) also rose at their fastest pace of 4.8 percent in a decade. According to the NBS, last December alone witnessed a CPI increase of 6.5 percent in China, lower than the record 6.9-percent rise in November but even with the figures in August and October. Wang said the NBS figure is not far from Morgan Stanley's expectation, and though China's CPI dropped slightly in December last year on the November figure, China still faces pressure from inflation. He added that China has showed signs of a soft landing with its growth rate of export and industrial growth to slow down. NBS statistics show that China's export growth rate dropped 1.5 percentage points year-on-year in 2007, with the total export volume hitting US$1.218 trillion, though still growing 25.7 percent more than that of the previous year. Under the trend of soft landing, Wang predicts that China's GDP growth will decline to 10 percent in 2008, with the CPI down to four percent. "Though the world is worried about the negative impact of US economic recession, I think it's not a bad thing for China to have such an imported soft landing," said Wang. Wang predicted that the Chinese economy will be able to realize a welcome re-balancing that would otherwise be unachievable, thus the weak exports will be offset by sustained strong domestic demand. But Wang also warn that if the Chinese authorities were to carry out tightening measures throughout the year in 2008, the Chinese economy may also possibly suffer a serious double-whammy impact, with the domestic demand-oriented and export-oriented sectors equally affected. Wang held that the downturn in external demand and its attendant cooling-off effect should be able to provide a breathing space for the Chinese authorities and ease the urgency to take aggressive policy actions with blunt policy tools. "We therefore expect a continued muddling-through approach in policy implementation in China this year, featuring 'three No's': no campaign-style administrative tightening, no large one-off revaluation of the Renminbi exchange rate, and no aggressive rate hikes," said Wang. Wang also believed that the latest move of the United States Federal Reserve in slashing its interest rate by 75 basis points may possibly bring some adjustment to China's macro-control policies. |
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