The government-sponsored State Information Center (SIC) expects GDP to accelerate to 7% in the second quarter of this year.
The chart below shows China’s GDP growth from mid-2007 and includes the expectations for June 2009. You can see that the first quarter was at 6.1% and that this time last year, growth was booming at over 13%.
Anticipated Chinese growth pickup for the second quarter of 2009
It’s largely to do with the availability of credit. China’s four state-owned banks handed out a whopping CNY250 bn worth of new loans just last month. And that’s not counting approx. CNY400 bn from other financial institutions. According to the SIC, bank lending isn’t likely to decelerate hugely during the next two months.
This is putting a lot of liquidity back into the economy. Chinese banks are pumping money through to households, sparing it from the credit collapse facing other countries. "It’s probably the only country in the world with a big expansion in private credit," says Ronald McKinnon, professor of international economics at Stanford University.
China’s economy is indeed recovering faster than the rest of the world. With bank lending soaring the way it is, we wouldn’t be surprised if it did indeed meet its 7% growth target for June.
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