Chinese growth could exceed 7.5 percent

Chinese economic growth is expected to exceed 7.5 percent this year, according to Xinhua, quoting the words of Yi Gang, the vice governor of the People’s Bank of China.

On the sidelines of the annual meeting of the International Monetary Fund (IMF) in Washington, Yi stated that growth could reach 7.6 percent.

“I believe we will definitely have a growth rate above 7.5 percent this year,” Yi said in Washington. “Perhaps 7.6 percent (or) something similar.”

After slowing down in 12 of the past 14 quarters, the Chinese economy is finally showing signs of stabilization, supported by government measures to stimulate growth, including tax cuts for small businesses and accelerated spending on infrastructure. One of the reasons for the recovery of exports, a traditional mainstay of the Chinese economy, is the strengthening of the U.S. economy.

Next week, Beijing will release data on gross domestic product for the third quarter, and analysts expect growth to accelerate to 7.8 percent compared to the same period last year.

Without going into details, the Chinese vice governor also stated that the government is keeping the shadow financing system and debt issues under control, which analysts consider the biggest threats to the Chinese economy.

The shadow financing system arose from the efforts of local government bodies to circumvent the borrowing ceiling by forming their own financial enterprises for the purpose of implementing infrastructure projects. The value of this financial system is currently estimated at 34 trillion yuan (5.6 trillion dollars), with a share of non-performing loans at 33 percent.

State auditors are currently reviewing the finances of local government bodies across China for the second time since 2010, and will publish their findings before the end of the year, including the eagerly awaited total public debt amount.

Economists warn that the audit could show that the total public debt has doubled from the 10.7 trillion yuan established in 2010.