Standard Chartered Bank: Four key sectors in China stimulus policies are fading

Economic Watch network reporter Kornhill "at present China's four key areas of economic stimulus measures have been phased out of varying degrees."　　Standard Chartered made the judgment in its latest research report on April 27. On the current fundamentals of China's macro economy, the report argues that China's current economic growth is strong and that there are some obvious signs of overheating in some areas. The key is whether policymakers can steer China's economy towards a more sustainable path of growth, otherwise a wide range of inflation and/or asset bubbles will trigger an overheating economy.　　Improper policy measures could trigger a sharp slowdown in the second half of the year or next year.　　Meanwhile, the report predicts that China will enter the second quarter, with a base effect last year, slowing growth. In view of the high domestic food reserves, international soybean high-yield, domestic pig population is large, standard report forecast domestic food price prospects more moderate.　　The international economic recovery is slowing and is holding back global oil prices, and imports of crude oil are the biggest in China's imports and should help curb domestic inflationary pressures. It is noteworthy that the report points out that the current economic stimulus measures in four key areas of China have been phased out in varying degrees. The central bank's quarterly Review of credit scale for commercial banks, real-estate credit tightening measures began to bear fruit, fiscal stimulus policy has shifted to neutral, which means that the 2010 budget may even have a contraction effect on economic growth. Investment approvals for newly-started projects have fallen sharply, and local governments are more difficult to finance projects under construction.　　In the real estate sector, most urban housing transactions have fallen markedly since January. Still, inflation is on the upside. Housing prices in major cities continue to soar along with land prices. Quarter-on-quarter growth is still strong, and the export sector is in the midst of a further recovery.　　The global economic recovery is likely to be faster than expected, and food and energy prices are likely to climb again at the end of this year or early 2010. As a result, StanChart believes that more needs to be done in the future – they still expect to raise interest rates two times in the two quarter (although the recent opposition to higher interest rates is stronger), the renminbi credit management will still be strengthened and the real estate industry will be further regulated. Meanwhile, the renminbi is expected to resume appreciation against the dollar in the two quarter, albeit at a slower pace.