Economy 'set to take advantage of recovery'

Updated: 2012-10-24 08:13

By Chen Jia (China Daily)

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Economy 'set to take advantage of recovery'

Exports to get boost amid greater global demand, economist says

A more favorable international economic environment may emerge next year, especially in Europe, and China is well-positioned to take advantage of any upturn, JPMorgan's chief economist said.

This, along with domestic policy adjustments that prevented the economy from slowing further, could see greater demand for exports, Bruce Kasman said on Tuesday.

"The current economic situation in China has shown a positive side, and what is happening in China provides a little bit of comfort to global investors rather than scaring them," Kasman said.

The US financial magnate expects the economy to grow around 8 percent next year.

Credit conditions, though, may remain tight, the economist said.

Economists predicted that quarterly growth of the world's second-largest economy may rebound in the fourth quarter, after it cooled to a three-year low of 7.4 percent in the third quarter of the year.

Economic growth has slowed for seven straight quarters, mainly dragged down by sluggish global demand that caused an export slowdown.

It was 7.6 percent in the second quarter and 8.1 percent in the first three months of the year.

As global market demand is likely to improve in the next quarter, GDP in 2012 will be slightly higher than the government target of 7.5 percent, Yu Bin, director of the Macroeconomic Research Department at the Development Research Center under the State Council, said.

Increasing domestic consumption and rebounding global demand are likely to drive up China's economic growth, said Li Daokui, a former adviser to the central bank, who is also a professor at Tsinghua University.

Kasman said: "A very significant change has taken place in Europe in the past couple of months, I think, which will benefit China, although the influence may be modest."

The European Central Bank unveiled details in September of a new bond-buying program, the Outright Monetary Transactions, to create liquidity in the indebted area.

"The program has made an important change to the dynamics in Europe, and is good news for European growth," the JPMorgan economist said.

"In addition, that will help support the lifting of the global economy over the next number of quarters."

He said the debt crisis in the EU will probably reach a head in March.

Kasman predicted similar growth for the US in 2013 as this year, about 2 percent.

"If trade continues to develop between the US and China that is generally a healthy thing for both countries," he said.

"I think currency policy right now is certainly not a first-order issue on the agenda between the US and China."

In September, the US released the third round of quantitative easing.

The policy had a pretty modest effect on the US recovery and the global economy, according to Kasman.

"It is likely to put some down pressure on the US currency value and add modest upper stress on inflation expectations," he added.

Wei Tian contributed to this story.

chenjia1@chinadaily.com.cn