Thursday, January 5, 2012

Wen Sees a ‘Relatively Difficult’ First Quarter as Chinese Exports Weaken

From Bloomberg:

Chinese Premier Wen Jiabao said business conditions may be “relatively difficult” this quarter and monetary policy will be fine-tuned as needed.

“We see downside pressure on our economy and elevated inflation at the same time,” Wen said during a two-day trip to Hunan province, according to a statement on the government’s website yesterday. “We also face problems of weakening external demand and rising costs for companies.”

Economists at Barclays Capital and Bank of America Corp. say the central bank will cut lenders’ reserve requirements (CHRRDEP) before a weeklong Chinese New Year holiday starts on Jan. 23, the second reduction since 2008. The ruling Communist Party is shifting focus to supporting growth rather than damping inflation as Europe’s debt crisis threatens to curb exports.

“The government is closely monitoring the downside risks to growth,” said Chang Jian, a Hong Kong-based economist at Barclays Capital. “With an expected deceleration in property investment and exports, we expect to see more weakness in industrial activity.”....read more

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