Jan. 30 – The chairman of Morgan Stanley Asia Limited said during the sidelines of the Davos World Economic Forum that the Chinese economy should post a strong rebound in 2010 when GDP growth reaches 8 percent.
Stephen Roach told Xinhua: “China has become increasingly tied with the global economy and does not get special relief from the global shock. The main driving force of China’s rapid GDP growth in recent years is export, but now China’s exports are sliding. ”
Chinese companies are dependent on export demand from the United States, Europe and Japan. The current global economic crisis has slowed demand and affected China’s GDP growth.
Roach forecasts that the Chinese economy is in a better position to recover from the global crisis and in addition to infrastructure, China should seriously commit to providing social security, pensions, unemployment insurance and health care, and develop the domestic market. China’s GDP is expected to pick-up in the second half of the year despite a a sluggish start for 2009.
According to a recent Merrill Lynch report, the Chinese economy bottomed out in December 2008 stretching until the first quarter of 2009. The report said that in the first quarter of 2009, export growth was expected to drop further although domestic demand was likely to gain some momentum. It added: “From Q2, a rise in Chinese domestic demand will likely outpace the fall in external demand, and we expect growth to pick up from the second quarter and we are quite confident about an 8 percent GDP growth in 2009.”
The report stated that Chinese industry indicators indicate a recovery. Industrial production growth for December rebounded to 5.7 percent year-on-year from 5.4 percent in November. In addition, electricity production was down 7.9 percent, an improvement from the 9.6 percent slump in November.