Liquidity squeeze bleeds equities

Updated: 2013-06-25 01:29

By WU YIYAO and Xie Yu in Shanghai and Chen Jia in Beijing (China Daily)

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The country's new cabinet may tolerate a lower growth rate for the rest of 2013 while it prepares to launch new programs, economists said.

"As the medium-term view for China's potential growth has dropped to 7-8 percent and the new leaders are increasingly aware of this, we think Premier Li's ‘bottom line' for growth has fallen to 7 percent from 7.5 percent," said Chang Jian, a senior economist with Barclays Bank.

GDP grew 7.7 percent in the first quarter, slowing from 7.9 percent in the last quarter of 2012.

In the last few weeks, many investment institutions have cut growth forecasts for China.

HSBC and Barclays lowered their predictions for China's 2013 GDP growth to 7.4 percent, below the government's target of 7.5 percent.

Three months ago, most international investors were confident in seeing 8 percent growth.

Zhang Zhiwei, chief economist in China with Nomura Securities, said there was even a 30 percent possibility of quarterly growth falling below 7 percent later this year.

The National Bureau of Statistics will release second-quarter GDP numbers on July 15.

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