A survey of leading economists in China shows that thoughts of a slowdown are in the air.
Slightly over 96 percent of the economists surveyed by Sohu Finance, a popular Internet portal, thought the growth of China’s gross domestic product (GDP) would slow down in 2012; less than four percent thought GDP growth would increase year on year.
The questionnaire on Sohu, titled “forecast of China’s economic situation in 2012,” was presented to more than 100 well-known Chinese economists and scholars of the economy.
Economists surveyed included Mao Yushi, Xie Guozhong, and Fred Hu, all well-known figures in China.
Just over 93 percent of the economists surveyed believe that GDP growth will be held at more than eight percent. A report in Finance and Financial Management said “eight percent” has become something like “the dividing line between life and death” for China’s economy, because only by keeping growth at that rate can the employment rate be maintained.
Nearly seven percent of the scholars surveyed think inflation will remain the same, while just over 93 percent think it will be lower than in 2011.
Most economists (85 percent) thought that the revaluation of the Renminbi, or yuan, would slow in 2012.
Over 90 percent of the economists think housing prices will fall, though 80 percent think it will be a small dip; the rest think the dip will be significant.
Mao Yushi thinks that a number of large real estate firms are likely to go bankrupt in 2012, and that the amount of vacant houses will precipitate a drastic decline in property prices. He argued that no good will come of the recent attempts at state intervention in the housing market, as the regime attempts to avert a crisis.
Since 2011, in order to control inflation and the property market, Beijing has continued to tighten credit. It raised the deposit reserve ratio six times last year, which also had the knock-on effect of making things more difficult for small and medium-sized enterprises.People’s Bank of China decided in November 2011 that it would lower RMB deposit reserve ratio by 0.5 percent for deposit-taking financial institutions starting in Dec. 5, 2011. It was the first time China’s central bank had lowered the deposit reserve ratio in three years as it tried to keep inflation down.
The survey shows that nearly 70 percent of scholars think China’s monetary policy will be looser in 2012. Mao Yushi thinks this will force prices up.
Read the original Chinese article.