Chinese economy starts to pick up

The Chinese economy is beginning to pick up again after having reported its poorest quarterly growth since the end of the financial crisis in the opening three months of this year, revealed a Reuters poll.

Economists forecast that the second biggest economy in the world will grow by 8.4 per cent in 2012, unchanged from expectations in the previous poll in January. In addition, they predict that growth will gradually move higher in the few months of next year to hit 8.7 per cent by the April-to-June quarter.

They anticipate that the country will at least meet and most likely exceed the government’s growth rate target of 7.5 per cent for 2012, with only four out of 30 predicting that growth will be below eight per cent. Credit Agricole’s Dariusz Kowalczyk said that an eight per cent growth forecast is realistic and that, even if growth is marginally lower, a hard landing is not likely.

Price pressures are anticipated to remain under control, with the median inflation forecast for 2012 being 3.4 per cent, well below Beijing’s target of four per cent and unchanged from January.

This means the People’s Bank of China (PBOC) is able to cut the banks’ reserve requirement ratio by 50 basis points for the final three quarters of this year, revealed the poll. That would see the ratio reduced to 19 per cent for the next year and to 18 per cent for the second quarter of next year.