Opinion

Slowdown ahead, but no hard landing

(China Daily)
Updated: 2010-07-07 09:55

Zhong Wei

Zhong Wei, economist at Beijing Normal University

The era of China's fast economic growth is coming to an end. The country's economic growth has passed its peak and will gradually slow down.

Internationally, the US economy and the dollar are trustworthy, at least for the time being. The dollar has stood out as a winner in this round of crisis. In the post-crisis era, the US recovery has been the steadiest so far.

However, China's growth peak has passed. In 2009, its year-on-year growth was about 6 percent, 8 percent, 9 percent and 10 percent for each quarter, respectively. In the first quarter of this year, it was 11.9 percent, which could be the peak.

In the second and third quarters, if macroeconomic regulation is not significantly loosened, economic growth will definitely slow down. In the future, growth momentum will gradually weaken.

Zhao Xiao

Zhao Xiao, economist at the University of Science and Technology Beijing

China's economic growth will get lower quarter by quarter. Inflation will not be an issue for the country.

The next biggest problem for China is whether the country will face slower growth and how it can find new growth engines in the medium term.

Given the current situation, it is very possible that growth will slow in the medium term. China's economic growth fell to around 6 percent for three quarters during the Asian financial crisis. The return to high growth last year did not mean China's economy had entered a period of stable growth. A double-dip slowdown is possible, but a more important issue is how to maintain long-term growth as exports, real estate and the "population dividend" play a less important role in the coming five to 10 years.

Globalization and rising external demand have been crucial to China's success over the past three decades. But it is unlikely that China can maintain this export-driven growth as neither Europe nor the US can afford any longer to import as much as before.

China's property sector still has a promising outlook. The government used to crack down on the property industry when social problems occurred, before shifting to stimulate the industry when the overall economy encountered trouble. I don't think these pendulum-style policy swings will continue in the government's new round of economic regulation.