By Simon Rabinovitch and Langi Chiang
BEIJING, Dec 11 (Reuters) - China's economy will flirt with its slow-growth danger zone next year as growth prospects have weakened from just a few months ago in the wake of the global downturn, a Reuters poll shows.
The economy will stage only a faint recovery in 2010, the poll suggests.
A shrinking trade surplus will pile the pressure on China with a weak property sector and tepid business outlook dragging down the domestic investment that drove the economy to five straight years of double-digit growth through 2007.
Forecasts of economists polled by Reuters late last week centred on gross domestic product growth of 8.0 percent next year -- down from 9.0 percent in the previous quarterly poll -- and 8.5 percent in 2010.
The government has long pledged to deliver 8.0 percent annual growth, a level widely regarded as the minimum pace needed to absorb the millions of people entering the work force every year.
"While private sector activities would likely remain subdued, the impact of the authorities' latest aggressive countercyclical macro policies, both on the fiscal and monetary policy front, would start to kick in powerfully in the coming months," Grace Ng and Qian Wang, economists with J.P. Morgan in Hong Kong, said in a research note.
Along with a slew of interest rate cuts, the centrepiece of the government's campaign to support the economy is the 4 trillion yuan ($580 billion) stimulus plan announced last month, money that is to be spent between now and the end of 2010.
The divergence in outlooks between Chinese and foreign financial institutions in the Reuters poll is quite stark. The five highest 2009 growth forecasts came from Chinese institutions, while the four lowest were from foreign houses.
Economists expect consumer inflation, which receded to 4.0 percent in the year to October from a 12-year peak of 8.7 percent in February, to average 1.9 percent in 2009. That is well down from the median forecast of 4.0 percent in the previous poll.
One analyst, from Shanghai Securities, forecast the abrupt drop in consumer inflation, led by fast-falling food prices, could usher in China's third bout of deflation in a decade.
"China faces increased deflation risk due to the bursting of global commodity price bubbles and pressure from unemployment and overcapacity in the accelerated economic downturn," China International Capital Corp economists in Beijing said in a research note.
China's soaring trade surplus may finally begin to lose altitude in the next two years as global economic straits erode the country's export strength.
The poll projects that the country's trade surplus will narrow to $215.5 billion in 2009, well down from the record $262.2 billion registered last year. Following are the results of the poll:
GDP CPI Trade Surplus
pct change pct change US$bln
2009 2010 2009 2010 2009 2010 Guoyuan Securities 9.0 9.3 3.4 3.5 175.0 180.0 Guosen Securities 8.8 8.5 2.5 3.5 350.0 350.0 Bank of Communications 8.5 8.5 0.2 1.5 230.0 210.0 China Construct'n Bank 8.3 8.8 1.8 2.3 180.0 130.0 Industrial Bank 8.1 7.9 0.3 -0.2 190.0 200.0 Nomura 8.0 8.5 1.0 3.5 198.0 131.0 RBS 8.0 8.5 3.8 5.9 241.0 225.0 Shanghai Securities 7.8 8.3 -1.0 2.0 230.0 250.0 Moody's Economy.com 7.7 8.6 4.5 3.7 ~ ~ Daiwa Inst. of Research 7.5 8.0 2.5 3.5 201.0 199.0 UBS 7.5 8.0 1.5 2.5 307.3 305.5 Deutsche Bank 7.0 6.6 1.9 1.8 ~ ~ --------------------------------------------------------------- Median 8.0 8.5 1.9 3.0 215.5 205.0 Forecasts in previous Reuters surveys:
GDP CPI Trade Surplus
2008 2009 2008 2009 2008 2009 Sep 2008 9.9 9.0 6.3 4.0 246.7 230.9 Jul 2008 10.0 9.5 7.0 5.8 228.0 220.0 Mar 2008 10.0 9.8 5.7 3.9 285.5 290.0 Dec 2007 10.7 ~ 4.2 ~ 318.0 ~ Sep 2007 10.5 ~ 3.5 ~ 328.0 ~ Jun 2007 10.0 ~ 3.0 ~ 274.8 ~ ~ Surveys done in 2007 did not include forecasts for indicators in 2009. Historical data:
GDP CPI Trade surplus
pct change pct change US$ bln
2003 10.0 1.2 25.5
2004 10.1 3.9 32.0
2005 10.4 1.8 102.0
2006 11.1 1.5 177.5
2007 11.9 4.8 262.2 --------------------------------------------------------------- Five-year average 10.7 2.6 119.9