China Will Sustain Economic Rebound This Quarter, PBOC Says

China Will Sustain Economic Rebound This Quarter, PBOC Says


Oct. 30 (Bloomberg) -- China will sustain its economic rebound this quarter and growth is likely to top the government’s 8 percent target for 2009, the central bank said

Policy makers need to “manage inflation expectations,” curb excess capacity and encourage sustainable lending growth, the central bank said in a third-quarter report posted on its Web site today.

A $586 billion stimulus package and record growth in new loans have countered an 11-month slump in exports, helping China to bounce back from the worst global slump since the Great Depression. China’s economic acceleration and faster-than- expected growth in the U.S. may help to extend this year’s global rally in stocks.

China’s consumer prices are expected to bottom and rebound at the end of this year, the central bank said. Inflation expectations are strengthening, it said.

Demand for credit will be sustained after an unprecedented $1.27 trillion of new loans in the first nine months of this year, the report said, adding that projects already started need “a large amount of loan support” and property investment is accelerating.

“Structurally, medium and long-term loans will continue to increase notably and bill financing will keep declining,” the central bank said.

China’s economy expanded by 8.7 percent in the third quarter from the second quarter on an annualized, seasonally adjusted basis, the central bank said, citing its own calculation. That compared with 14.9 percent gain in the second quarter, according to a previous central bank statement.

Households’ inflation expectations continue to strengthen, the central bank said, citing an index which has climbed for three quarters.

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