China’s economic growth to slow to 6.8%

2015-01-29 12:34:38

China's economic growth may bottom out at around 6.8 percent in 2015, a private think tank said on Wednesday, citing downside risks to investment which remains a key driver in growth dynamics.

Infrastructure and property investments may continue to decelerate this year, weighing on the overall economic growth, Zhang Shuguang, chairman of the Academic Committee at Beijing-based research group Unirule Institute of Economics, told the Global Times on Wednesday, at the release of the institute's latest quarterly report on the Chinese economy.

The other two wagons hauling the economy growth - exports and consumption - are estimated to continue current levels of growth and thereby might not be enough to jumpstart the economy, remarked Zhang.

The Chinese economy expanded by 7.4 percent in 2014, official data showed, the weakest performance in 24 years.

The economy is widely believed to experience a further slowdown this year amid a new normal of shifting the pace of growth from high speed to a medium-to-high speed, although divergence remains over the extent to which the economy will cool.

A more optimistic estimate by the Center for Forecasting Science under the Chinese Academy of Sciences, a government think tank in Beijing, was released on Friday which projected an economic expansion of 7.2 percent for the whole of 2015.

Among the challenges confronting the Chinese economy, Zhang mentioned the difficulty for small and medium-sized enterprises in financing their businesses amid the slowing economy.

Loans granted to enterprises are normally 30 percent above the benchmark lending rates, which coupled with a range of restrictions placed by banks on borrowers serve to aggravate the problem of capital raising, according to Unirule's research report.

Rather than introducing more cuts in benchmark interest rates, the central bank should further reduce the amount of cash financial institutions are required to set aside as reserves in order to inject more liquidity, suggested Zhang.

The latest rate cut has yet to have the effect of reducing borrowing costs for small businesses, Zhou Dewen, president of the Wenzhou Council for the Promotion of Small and Medium-sized Enterprises, told the Global Times on Wednesday.

On November 21, 2014, the central bank surprised the markets with an announcement of interest rate cuts for the first time in more than two years.

As for the burgeoning Internet-based peer-to-peer lending sector, which still lacks regulatory oversight, its effectiveness in meeting demand for capital remains in doubt, Zhou noted.



Global Times