BEIJING (Reuters) – China’s economy may grow 3% this year as the government ramps up policy support, said Zhang Ming, a researcher at the Chinese Academy of Social Sciences, a top government think tank.
Gross domestic product could return to 2% to 3% growth in the second quarter as factories step up production, Zhang said in a forum held online on Tuesday.
China’s economy shrank 6.8% in the first quarter, the first contraction on record. Highlighting the uncertain outlook, the government did not set a GDP growth target at its annual parliamentary gathering in May.
Zhang still expects the central bank to trim key interest rates, the Medium Lending Facility (MLF) and the Loan Prime Rate (LPR), while cutting the required reserve ratio (RRR) – the amount of cash banks are required to hold – twice in the second half of the year.
The timing of the RRR cuts would probably correspond to the expected issuance of special treasury bills and local bonds to ensure sufficient liquidity, he said.
But he also expressed concern over dwindling overseas orders since April as coronavirus cases started to spread and spike in the rest of the world, with worries rising about a second wave.
“It would be very tough for the manufacturing sector in the second half,” he said.
“Real estate is resilient, but property investment will not rise sharply, as the tone of policy tightening will not be fundamentally reversed. Therefore growth will have to mainly depend on infrastructure.”
(Reporting by Yawen Chen and Kevin Yao, editing by Larry King)