China’s economy to slowdown for 9th quarter: Experts

Amid gloomy outlook forecasts for the Chinese economy which is slowing down due to an exports slump, the Central Bank has injected $46 billion worth of local currency to improve the cash liquidity.

This is the biggest single day injection in seven years.

China’s economic growth is likely to slow for the ninth consecutive quarter in July-September, top policy advisers said.

If their predictions come true, the Government may find itself taking “remarkable measures” to combat the slump, the state-run China Daily quoted them as saying.

Zheng Xinli, deputy head of the China Centre for International Economic Exchanges, a government think tank, said China’s economic data for August has turned out worse than expected and the economy’s prospects remain gloomy.

Amid these circumstances, the country’s GDP is unlikely to grow at a faster pace in the fourth quarter.

“The urgent need right now is to clarify what are the most effective ways to boost domestic demand,” Zheng said.

He said growth can perhaps be best accelerated through expenditure on household goods, infrastructure, public utilities and modernised agriculture.

The dim economic indicators for August may push authorities to more aggressively fine-tune economic policy in the short term, economists said.

In August, the year-on-year growth rate for industrial output declined to 8.9 per cent, down from 9.2 per cent in July.

The August number was the lowest in the past 39 months, according to the National Bureau of Statistics.

Meanwhile the central bank used reverse-purchase agreements yesterday to inject 290 billion yuan ($46 billion) into the financial system in an attempt to increase cash liquidity in the short term.

It is the biggest single day injection since 2004.

The authorities will use various monetary policies to maintain a steady increase of credit and support the real economy, or the part of the economy related to goods and services, the People’s Bank of China said.

“More attention will be paid to the new bailout and economic stimulus plans in the euro zone and the US,” the central bank said in a statement yesterday.

The Chinese government has already announced about $150 billion worth of stimulus package to be spent on various infrastructure projects for reviving the economy.