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New mindset needed to observe Chinese economy

Updated: Nov 15,2014 3:21 PM     Xinhua

BEIJING — As the Chinese economy shifts gears to a medium-to-high level of growth, the world needs to observe it with a new mindset while avoiding excessive pessimism, chief economist at Mizuho Securities, Shen Jianguang, said on Nov 14.

“Compared to developed economies such as the US and Europe as well as other BRICS nations, China now remains a shining spot in terms of growth,” Shen said in an interview with Xinhua.

“Amid this ‘new normal’ in the global economy, the risk is still relatively lower in the Chinese economy. It is still leading growth among emerging economies,” Shen said.

Official data showed growth in the Chinese economy slowed to 7.3 percent in the third quarter, down from 7.5 percent in the second and 7.4 percent in the first.

In coping with the short-term slide, Shen said that the country has rolled out a package of timely measures, including targeted cuts of reserve requirement ratios for certain banks and beefing up credit support for homebuyers, which has led to a rebound in house sales.

The National Development and Reform Commission (NDRC), the nation’s top government agency in charge of economic planning, has also sped up approval for investment projects over the past month in a bid to stabilize economic growth amid shrinking investment in the property sector.

A total of 21 investment projects, worth almost 700 billion yuan ($114 billion), were approved by the NDRC between Oct 16 and Nov. 5.

Shen added that the rapid e-commerce growth was also expected to cushion against an economic slowdown.

Data shows Chinese e-commerce giant Alibaba posted record sales of 57.1 billion yuan on China’s Singles’ Day on Nov 11, which is similar to the Black Friday shopping holiday in the United States, this is a sharp increase from 2013’s sales of 36.2 billion yuan.

However, a raft of weaker-than-expected economic indicators released on Nov 13 by the National Bureau of Statistics (NBS) has highlighted downward pressures for the economy and prompted analysts to eye further easing policies in the near term.

The NBS data shows that China’s industrial output grew 7.7 percent year on year in October, down from an 8-percent increase in September, meanwhile, fixed asset investment continued to dip in the first 10 months, and retail sales growth retreated for a fifth-straight month in October.

Given the soft data, Shen predicted that fourth-quarter GDP growth data might struggle to reach the level of growth in the third quarter.

Chang Jian, Barclays chief China economist, said in a note on Nov 13 that she maintained the view of two cuts in the benchmark interest rates, one in the fourth quarter and one in the first quarter of 2015.

HSBC also said that it continued to expect more monetary and fiscal easing in the coming months.