News & Reports News Year 2012 November 2012 China faces twin hurdles to sustain economic growth

China faces twin hurdles to sustain economic growth

CHINA faces immense pressure to maintain economic growth despite recent signs of recovery due to uncertainties in exports while the benefits of urbanization may be overvalued, economists said yesterday in Shanghai.

"We should avoid being too optimistic," Shen Jianguang, managing director and chief Asia economist at Mizuho Securities Asia Ltd, said at the Shanghai International Private Equity Forum.

Shen cited falling trade as a potential threat to China's economic growth next year.

China's major exports markets are going through a difficult period in which demand is weak although the country's exports grew 11.6 percent from a year earlier in October and 9.9 percent in September, Shen said.

"The United States can hardly present a decent recovery next year because of its too aggressive easing policies in the past few years which make its economy numb to stimulus, and the European Union is no better," Shen said.

At the China Import and Export Fair, or Canton Fair which ended earlier this month, the value of deals sealed fell 9.3 percent from the previous session in May.

Another threat comes from the excessive hopes of urbanization, said Li Xunlei, deputy CEO and chief economist at Haitong Securities Co.

"China's urbanization may be unable to create so much consumption and investment as expected" because income levels may not increase accordingly, Li said.