China government adviser predicts second-quarter growth below 7 percent

Wed Jun 13, 2012 7:12am EDT
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By Kevin Yao

BEIJING (Reuters) - China's annual economic growth could drop below 7 percent in the second quarter, an influential government adviser said in published remarks on Wednesday, the most pessimistic forecast of any government or private-sector economist.

Sub-7 percent growth would reflect the pace of the economy during the global financial crisis. China reported economic growth of just 6.6 percent in the first quarter of 2009.

A sharpening slowdown in the world's second-biggest economy galvanized policymakers last week into cutting interest rates for the first time since the global financial crisis -- their boldest move yet to try to revive an economy facing its sixth straight quarterly slowdown.

"GDP growth in the second quarter could fall below 7 percent if there is no significant improvements in economic data for June," said Zheng Xinli, deputy head of the China Center for International Economic Exchanges (CCIEE) -- a government think-tank in Beijing.

His comments were carried in the overseas edition of the People's Daily, the main newspaper of the ruling Communist Party. Zheng is also vice head of the economic committee of the Chinese People's Political Consultative Conference (CPPCC), which advises China's parliament.

Until 2009, he was deputy chief of the Chinese communist party's policy research office.

Zheng said year-on-year industrial output growth usually outpaces GDP growth by 3-5 percentage points. Industrial output rose 9.3 percent in April, the weakest pace in three years, and increased 9.6 percent in May.

So unless activity picks up in June, second-quarter GDP growth could be below 7 percent, Zheng argued.   Continued...

An investor looks at computer screens showing stock information at a brokerage house in Shanghai June 8, 2012. REUTERS/Aly Song