Business / Economy

Recovery beats expectations, risks still ahead

(Xinhua) Updated: 2014-08-04 17:33

China had suffered a worrisome slowdown in the first quarter with many macro indicators weaker than market consensus forecasts, posing a significant threat to the government's commitment to achieving "around 7.5 percent" growth target in 2014.

In response, China introduced a series of growth-supportive measures. The Chinese leadership has been intensifying the anti-corruption campaign this year indicating more strongly than ever, they desire a stable economic and financial backdrop.

Recovery beats expectations, risks still ahead 
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Latest macro indicators suggest that these measures have been instrumental in helping China's economy recover more quickly than expected.

Many experts believe the cumulative impact of monetary easing efforts, through targeted liquidity provision, and growth-supportive measures will continue to help bolster the Chinese economy for the rest of this year.

The recent improvement of key macro indicators has helped the market regain some confidence.

Chinese equities made notable progress in July, with the benchmark Shanghai Composite Index advancing 7.48 percent last month. It marked the best month for China's equity markets since December 2012.

HSBC and Bank of America Merrill Lynch upgraded their forecasts for China's year-on-year gross domestic product growth in 2014. HSBC raised its forecast to 7.5 percent from 7.4 percent, while the latter lifted its prediction to 7.4 percent from 7.2 percent.

Confidence is being restored, but the world's second largest economy is still faced with significant pressure and risks.

Among them, the property sector drew the most attention. In the second quarter, new sales and property investment in China slid, with the former contracting further and the latter's growth sinking to a 20-month low.

Another concern is local governments' rising debts and possibly inadequate fiscal capabilities as the central government asked them to implement growth-supportive measures.

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