China’s 2013 Economic Forecast

The world’s second biggest economy, China, has successfully kept its head above water as economic crisis continued to overwhelm the rest of the world. Despite the global economic slowdown, China’s economy remains steadfast even with the cautious decisions made by China’s policy makers during 2012. The economy managed stability despite getting just a fourth of the total stimulus amount given in 2008. This alone assures that China’s economy is looking forward to a brighter 2013.

China Resilient in the year of the Water Snake

According to the World Bank, China, along with the rest of the East Asia and Pacific region, will continue to be resilient and even grow stronger in 2013. This due to the fact while the rest of the world is slowly recovering from the crisis, China, though not untouched, has a more stable foundation. Although not as strong as the previous year, 2012 did not bring major losses, which assures a steady first quarter at least. In addition, based on the economy’s 2012 quarterly performance, World Bank predicts growth to up to 8.4 percent this 2013 and will continue to grow an average of 7 to 8 percent by 2014 onwards.

Property Stocks Dip, Monetary Adjustments to Tighter Reforms

China’s bright 2013 economy may be hard to believe given last year’s disappointing performance in the stock market. The past four years saw investors abandoning stocks because of the global economic crisis with the 2012 ending with a bang and shows Shanghai Index at its lowest with 6 percent fall. This confirms the economic slowdown that plagued the last quarter of the year which in turn discouraged investors from coming.

However the prospect of a better year is affirmed by the president and CIO of Shah Capital, Himanshu Shah. According to Shah, the monetary tightening that was implemented for the past two and a half years is now over so earnings growth is likely to improve. In addition, investors are likely attracted to the economic reforms like liberal interest rates. In fact, despite ending the year on a rather sour note, some Chinese industrial companies started picking up in September 2012 with profits showing 7.8 %.

Growth in the Banking Sector for 2013

Banks like Standard Chartered and HSBC also shares optimism for the year 2013. While Standard Chartered predicts that the improved corporate profits and GDP growth will have Chinese stocks rising up to 13%, HSBC is foreseeing the share values to go up 19 to 26 percent.

Even across the seas, people’s interest in China’s economy is unwavering that it seems all eyes are looking at the powerful country. Not for a light reason as China has a great influence on the global economy. The undeniable sway of China on equity and commodity markets makes it the economy to watch out for. That, and the fact that China is a huge market in itself with more than a billion citizens, makes nations hope and cheer for China’s economy to stay strong.

Pessimistic Outlook Despite Growth

Although experts see a lot of signs to forecast a rather sunny 2013 for China’s economy, there are still those who remain cautious. And smartly so, since businesses should never just decide based on optimism. According to Citi Investment Research’s Regional Strategy Head, Markus Rosgen, they still prefer the Hong Kong equity market to the (still) underweight China. Despite the talks of economic reforms, Phillip Chan, Shenyin Wango Securities’ director, believes that it will take time before significant effects starts showing in China’s economy.

Even Chief China Economist Zhiwei Zhang believes that China’s economic fate remains in limbo due to the tightening the control of credit supply. If this happens, then it’s going to be impossible to sustain the current growth recovery.

References:
http://www.mckinseyquarterly.com/Economic_Studies/Productivity_Performance/Whats_in_store_for_China_in_2013_3050#

http://www.chinadaily.com.cn/business/2013-01/30/content_16187177_2.htm

http://www.cnbc.com/id/100347827/World039s_No_2_Economy_Is_Setting_Itself_Up_for_Solid_2013

http://www.cnbc.com/id/100326283/World_Bank_Raises_East_Asia_Outlook_Sees_China_Growing_84_in_2013

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