Analysts hail China economic package, warn growth still to slow

Analysts on Monday welcomed China's announcement of a major package of measures to stimulate domestic demand but warned that economic growth was still likely to slow next year, reported dpa.

"While these measures cover a wide range of areas, the clear focus is government-financed or mandated investment and construction," Hong Kong-based economist Tao Wang of UBS Investment Research said in a report to clients.

"Public housing and infrastructure are likely to receive the biggest push," Wang said.

"These public projects will help to boost overall investment sentiment and bring about more bank lending," he said.

The government said top leaders agreed on the new measures to "offset the adverse external economy by boosting domestic demand."

It promised to spend an estimated 4 trillion yuan (588 billion dollars) on infrastructure projects, reduce some taxes and loosen bank lending requirements.

But the UBS report said growth of China's estimated gross domestic product (GDP) was likely to slow to 7.5 per cent next year, down from 9 per cent in the third quarter of this year.

Morgan Stanley Research in Hong Kong said it had lowered its GDP growth forecast for China from 8.2 per cent to 7.5 per cent.

"The lower growth forecasts are mainly explained by smaller contribution of net exports - due to slower export expansion - to growth and weaker investment in the real estate sector," Morgan Stanley said in a report.

"Consumption growth is also revised down moderately," it said.

The report said growth was likely to decelerate over the next three quarters staging a "modest recovery" in the second half of 2009 "as external demand starts to improve and the effect of China's pro-growth policy kicks in."

It said the main risk was a "potential massive collapse in real estate investment across the country."

But it added that the government's package "if consistently implemented, should help translate the balance sheet strength of the economy into economic growth resilience, limiting the extreme downside risk to the economy."

Wang said an "aggressive fiscal stimulus" was "necessary to jump start the economy," arguing increasing bank lending was "critical to sustain corporate investment needs."

The Shanghai Daily newspaper said the government had changed last year's macro-control policy of "preventing overheating and curbing inflation" and instead adopted a "principle of maintaining growth and taming inflation."

"China has to upgrade its economic growth structure," the newspaper quoted Zuo Xiaolei, chief economist at China Galaxy Securities, as saying.

"Exports cannot grow fast in the near future," Zuo said. "It is the right time for the government to boost domestic demand and stimulate consumption."

The package is designed to finance 10 major infrastructure programmes over the next two years, including transportation, rural projects, low-cost housing, environmental projects and post-disaster reconstruction.

Other measures include a reform of value-added taxes that would reduce the tax bills of companies by an estimated 120 billion yuan (17.6 billion dollars).

The government also decided to loosen lending rules for commercial banks to "channel more lending to priority projects, rural China, small and medium-sized enterprises, technical innovation, and mergers and acquisitions.

"With the deepening of the global financial crisis over the past two months, the government must take flexible and prudent macro- economic policies to deal with the complex and changing situation," it said in a statement.

It said China would adopt "active" fiscal and "moderately active" monetary policies in aiming for "steady and relatively fast" economic growth.

State media had speculated last week that the Transport Ministry was working on a plan to invest 5 trillion yuan (730 billion dollars) over the next three to five years, following the government's allocation last month of 2 trillion yuan (290 billion dollars) for the construction of roads, waterways and harbours.

The government is also keen to boost employment after falling exports caused tens of thousands of job losses this year in southern and eastern manufacturing bases.

Turkish embassy in Georgia talks joint energy projects of Georgia, Azerbaijan, Turkey
Turkish embassy in Georgia talks joint energy projects of Georgia, Azerbaijan, Turkey
Georgia reveals results of 18 foreign exchange auctions conducted by National Bank
Georgia reveals results of 18 foreign exchange auctions conducted by National Bank
Georgia sees increase in hazelnuts export
Georgia sees increase in hazelnuts export
Loading Bars
Latest
Iranian currency rates for October 27
Tractors with telepathic system used to cotton planting in Turkmenistan’s Lebap region
Uzbekistan reveals its COVID-19 data for October 27
“Jewish Journal” publishes an article on Armenian protest in Los Angeles equating Israel to Nazi Germany
Armenia didn't respond to Azerbaijan's requests for release of war prisoners - Commission
Iranian government eyes to attract investors for Markan coast development
Iran to submit budget plan for new year
Armenia confirms liberation of Gubadli city by Azerbaijan
Iran`s return to FATF blacklist restricts its exports
Destroyed military equipment of Armenian Armed Forces - LIST
Chief of staff of Armenian Army motorized rifle division killed
Latest situation at front line on Oct. 27
Chinese mainland reports 16 new imported COVID-19 cases
Brazil's COVID-19 cases surpass 5.4 mln
U.S. Senate confirms Trump's Supreme Court pick Barrett in nearly party-line vote
5.2-magnitude earthquake hits central Iran, no casualties
Czech Republic to introduce night curfew from Wednesday
61 more coronavirus patients die in Moscow in past day
Germany reports 8,685 new COVID-19 cases
Footage from liberated from occupation Gubadli city (VIDEO)
Footage from liberated from occupation Khanligr village of Gubadli region (VIDEO)
Armenia does not want to take bodies of its deceased soldiers as it fears anger of people - Assistant to the President of Azerbaijan
Kazakh PM meets with Turkish Defense Minister
Footage from liberated from occupation Padar village of Gubadli region (VIDEO)
Azerbaijan neutralizes one of 3 missiles shot by Armenian troops at Azerbaijan's Tartar
Azerbaijan's Bank Association denies lies spread by Armenian side
Effective co-op in field of border security established between Azerbaijan, Iran
Armenian Armed Forces shell Azerbaijan’s Tartar by using 'Smerch' missiles
Armenia indiscriminately targets civilians - Assistant to Azerbaijani president
Azerbaijanis hold rally in California, condemning Armenian terror (PHOTO)
Azerbaijani compatriots living in Minnesota hold protest rally (PHOTO)
Armenian Armed Forces shelling Azerbaijan's Tartar city, villages
Armenian armed forces shelling Tartar city with artillery, missiles in gross breach of humanitarian ceasefire
Iran's powder detergent production grows
Azerbaijanis in Denmark hold protest rally against Armenian terror (PHOTO)
Turkish embassy in Georgia talks joint energy projects of Georgia, Azerbaijan, Turkey
Protest rally against Armenian attack on Ganja held in Bielefeld, Germany (PHOTO)
Iranian Energy Exchange announces products to be on sale October 27
Armenian Armed Forces’ quadrocopter destroyed by Azerbaijani troops
Al Jazeera posts article covering aftermath of Armenian missile attack on Ganja
Baku's secondary housing prices show monthly decline
Investments in Iran's capital market increase
Uzbek Reconstruction and Development Fund to support creation of Export Support Fund
Turkey's export of defense products to Morocco plunges
Nagorno-Karabakh region to be liberated sooner or later: press secretary of Turkish president
USD falls against Uzbek soum for the first time in three months
Work connected with laying of gas pipelines on freed Azerbaijani territories kicked off (PHOTO/VIDEO)
Volume of maritime cargo shipment via Turkey from Spain disclosed
Turkmenistan significantly increases import of wheat flour from EAEU countries
Azerbaijani railway operator admitted to consortium of Trans-Caspian Transport Route
Georgia reveals results of 18 foreign exchange auctions conducted by National Bank
Iran Khodro reveals amount of funds saved thanks to domestic manufacturing
Export of Turkish-made defense products to China slumps
Armenian Armed Forces fire at school in Aghdam (PHOTO)
Assistant to Azerbaijani president comments on photo of Armenia's defense minister together with Armenian soldiers
Macron's anti-Islamic statements point to extreme misunderstanding of religion - Arab analyst
Uzbekistan’s Kashkadarya tops list of regions implementing foreign investments
Heritage Foundation's Foreign Policy Studies Center Director comments on photo showing Russian field camp set up near Armenian Tegh
Georgia sees increase in hazelnuts export
Georgia reveals volume of exported apples
U.S. regrets EU move on tariffs, seeks deal on Boeing-Airbus row
Russia seeking to be stabilizer in South Caucasus, says Russian expert
Uzbekistan discusses strengthening multilateral co-op with China and S. Korea
President Aliyev congratulates commanders of joint military corps who distinguished themselves in liberation of Gubadli city, villages of Gubadli district from occupiers
Review of statistics of people registered within state program 'Remotely from Georgia'
Volume of trade turnover between Turkmenistan, Russia’s Perm Krai revealed
Azerbaijani army does not fire at civilians - Defense Ministry
President Ilham Aliyev interviewed by Italian Rai 1 TV channel (PHOTO)
Iran launches new water treatment facility in Tehran
Iran studies Famotidine as Coronavirus treatment
Industrial production in Karabakh to increase in post-conflict period - CAERC head
Turkish president urges to boycott French goods
Work on power supply to strategic facilities in freed Azerbaijani territories underway (PHOTO)
Bank of Georgia suffers loss
S&P Global Ratings expects Azerbaijan's export to grow in next years
Iran’s Bahar Azadi gold coin price falling
Wildfire breaks out in Azerbaijan's Dashkasan district from Armenian attacks (VIDEO)
SOCAR considering new investments in Turkey
Romania's import of Azerbaijani products for 9M2020 revealed
Armenian Armed Forces fire at Azerbaijan’s Tartar district
Price of most Georgian companies’ shares up on London Stock Exchange
UK armed forces take control of ship in English Channel, seven people detained
Mobile phones and smartphones import down in Georgia
Azerbaijan confirms 131 more COVID-19 recoveries
Iran enlarges petrochemicals production
Azerbaijan hikes export to Belarus in 9M2020
S&P says Azerbaijani manat to maintain position against USD
German government raises 2020 GDP forecast to -5.5%
Turkmenistan ready to support contracts with companies of Russia’s Perm Krai
Recruiting children by Armenia against Azerbaijan is war crime, says Lebanese lawyer
President Ilham Aliyev: Azerbaijan restoring historical justice on battlefield
Azerbaijan's Aghjabadi district again under fire of Armenian Armed Forces
It is not worth using peacekeeping efforts of third states in settlement of Karabakh conflict - Georgian expert
Weekly digest of Azerbaijan’s energy sector
Uzbekneftegaz accelerates commissioning of technological devices due to autumn-winter period
EU's Barnier heads for London for Brexit deal talks
Corn oil produced by Georgian Plant Oil Company Qarva to enter supermarkets
President Ilham Aliyev talks proving to world that Karabakh is Azerbaijan's historical land
Turkey discloses 9M2020 data on cargo movement via its ports from UK
Armenia's leadership, criminal junta regime have no moral, ethical framework - Azerbaijani top official
All news