Don’t panic!

No double-dip, say economists

Don’t panic!

In times of uncertainty, we all have a tendency to fall back on expert forecasts of where things are going. And there have been a few coming out of China in recent days.

For a start, China’s next leader Xi Jinping declared during the visit of US vice-president Joe Biden that China wouldn’t face a “hard landing” (a topic WiC has been monitoring; see issue 108) .

His optimism was shared by Fan Gang, a former central bank adviser, who was speaking at the Annual China Bankers Forum. He told the China Daily that there is “no double-dip trend” at the moment. Instead it is “just a less optimistic situation.”

Fan remained bullish: “There’s no need to panic. Since the depth of the financial crisis in 2008, emerging markets have become much more independent of developed economies. The main growth momentum of China’s economy will not be affected.”

HSBC’s chief economist, Qu Hongbin also put out a note, after interviewing another Fan (Fan Jianping, chief economist at the State Information Centre under the National Development and Reform Commission). He warned not to read too much into the State Council’s decision to drop mention of inflation as a “top priority” from the minutes of its meeting in early August. Don’t expect a sharp reversal of the current tightening measures, Qu says, or another stimulus like 2008 just because Europe and the US look to be slowing.

GDP growth was “slowing but still strong”, with Qu forecasting a growth rate of 9.3% for 2011. Inflation would hover around 5% in the second half, before ending the year at 4%, Qu predicted.

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