Chinese economy will become more stable in Q2:expert

The Bank of China has recently published the analysis report of Chinese macro-economic and financial situation in the second quarter of 2012. The report said that because of improved external environment and the regulation and control of Chinese government, China's economic growth in the second quarter will increase slightly. The report forecasted a growth of 8.4% in GDP and 3% in CPI.

The possibility of "hard landing" of Chinese economy is very small. An analyst said that although the growth rate of some economic indicators keeps decreasing in the first quarter this year, the economic situation of the second quarter is expected to become stable.

Growth rate declines in Q1

According to data recently published by the National Bureau of Statistics, the total profits of state-level and above industrial enterprises reached 606 billion yuan in January and February 2012, dropping 5.2% year-on-year. The profits of state-owned enterprises have decreased by almost 20% year-on-year. It is the first negative growth of industrial enterprises since November 2009, triggering worries that the Chinese economy will once again fall into depression after rebound in the fourth quarter 2011.

Peng Wensheng, chief economist of China International Capital Corporation Limited, said that judging from the data of consumption, investment and trade, the gross demand will further slow down. The growth rate of GDP in the first quarter 2012 is predicted to decrease to 1.6% from the 2% of the fourth quarter 2011, lower than the expected 1.9%. The year-on-year growth rate may decrease to about 8.5%, lower than forecasted 8.7%.

Uncertainty grows

Liu Shijin, vice director of the Development Research Center of the Chinese State Council, said that judging from the economic data of January and February 2012, China's economic growth kept a downtrend and uncertainty has grown. However, the Chinese economy is expected to maintain a 8% growth this year and it will gradually stabilize in the second quarter.

"The uncertain factors in current economic downside make people worried," said Lian Ping, vice director of Industry Development and Research Committee under China Banking Association and chief economist of Chinese Bank of Communications. He said influenced by global economic environment, China's foreign trade may further fall in 2012.

Internal growth potential remains

Lian said that many people predicted that investment of China will dip below 20% this year. However, data of the first two months show that the investment did not extremely decrease. It is even better than expectations. In addition, although the foreign trade only increased less than 10%, it is higher than forecasted negative growth. Therefore, although the economic growth speed fell in foreign trade and investment, a certain growth rate was still maintained.

From these data, we can see that Chinese economy still has internal growth potential, said Lian.