“China’s economy is set to exit a seven-quarter slowdown as the government rolls out infrastructure projects and limited inflation lets officials hold off from tightening monetary policy.
The National Bureau of Statistics will report tomorrow that gross domestic product expanded 7.8 percent in the fourth quarter from a year earlier, according to the median estimate of 53 economists surveyed by Bloomberg News. That’s up from a three-year low of 7.4 percent in the previous period.
The risk is that the rebound may fade in the second half as the boost from railways and road projects ebbs and the government grapples with rising inflation and the expansion of shadow banking. While the nation is set to reverse its slide in economic growth, the pace remains short of the 10 percent average of the past two decades as higher wages and weakness in global demand limit export gains.
“The current recovery is being driven mostly by monetary and fiscal policy easing,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. “Once the momentum of policy easing slows, growth may trend down again.”
Tomorrow’s report will also include the latest monthly data. Factory output probably rose 10.2 percent in December from a year earlier, up from 10.1 percent in November, while retail sales advanced 15.1 percent after a 14.9 percent gain the prior month, according to median analyst estimates.
