Published : Jan. 14, 2013 - 20:28
BEIJING (AFP) ― China’s economy is poised finally to end a long downward trend in 2013, economists polled by AFP say, as the new communist leadership vows to retool the nation’s investment-led development model and promote a “happy life” for all.
The world’s second-largest economy is not expected to return to double-digit growth, but the economists’ predictions are a welcome spot of good news in a financial world assailed by the eurozone debt crisis and lacklustre recovery in the United States.
After seven consecutive quarters of slowing growth, China’s gross domestic product will rise by 8.0 percent in 2013, according to the median forecast of 15 economists surveyed by AFP. The poll also projected 7.7 percent growth for 2012.
Pedestrians walk past commercial buildings in the Sanlitun area of Beijing. (Bloomberg)
The figures would outpace the government’s 7.5 percent growth target for 2012 ― but are well below the 9.3 percent recorded in 2011 and 10.4 percent in 2010.
Maintaining growth is all-important for China’s communist leaders, who derive much of their claims to legitimacy from the country’s reform-led economic rise, which has lifted hundreds of millions of people out of poverty over the past three decades.
The rebound comes as China formally wraps up a once-in-a-decade leadership change in March when Xi Jinping, who was named Communist Party chief in November, takes over as president and Li Keqiang becomes premier in charge of day-to-day administration.
Xi, in his first public appearance after being chosen to lead the party, said China’s citizens “want their children to have sound growth, have good jobs and lead a more enjoyable life. To meet their desire for a happy life is our mission.”
China’s stunning economic transformation has long been fuelled by heavy state investment in railways, airports, bridges and buildings, as well as an emphasis on manufacturing and exports.
But it is now trying to promote demand from its own increasingly well-off consumers as the economy’s main driver. And the Communist Party says it recognizes the need to encompass the have-nots who have failed to share in the boom as a rich-poor gap opens up.
The National Bureau of Statistics is due to announce GDP figures for the fourth quarter and the whole of 2012 on Friday.
For the final quarter of last year, the median forecast in the AFP survey was 7.8 percent, up from official third-quarter growth of 7.4 percent ― which was the lowest figure since early 2009.
“The new leaders themselves would like economic growth to not be slower than 2012 ... in their first year,” Chen Xingdong, a Beijing-based economist with French bank BNP Paribas who is expecting 2013 growth of 8.3 percent, told AFP.
Stronger monthly data during the fourth quarter, including industrial output and retail sales, has fanned optimism the worst is over, as did new single-month highs for imports and exports in December.
But the economy still faces challenges such as unresolved structural problems including overcapacity and reliance on investment-driven growth, said Yao Wei, Hong Kong-based economist with Societe Generale.
“We can’t get over-optimistic over the current recovery,” she said.
China’s economy averaged GDP growth of 10 percent in the decade to 2010. A slower rate of 7.0-8.0 percent is seen by economists as part of China’s natural economic evolution as spending on projects such as transport and utility networks is reined in. But market optimism over China’s prospects risks being disappointed if in 2013 “the recovery remains centered on infrastructure and real-estate investment rather than consumption”, wrote Mark Williams, chief Asia economist at Capital Economics.
Some also question how serious the government is about reforming the economy, as well as other challenges it has vowed to pursue, including cracking down on corruption.
“The current difficulty we have with the policymakers is that the focus is on changing the perception and hoping that the people believe,” said Andy Xie, a Shanghai-based independent economist.
“It shows that real change is very hard to do. So you shift to the propaganda department to see if they can do the job.”