China’s GDP may below 8% in the second quarter

China’s economic growth is expected to fall below 8% in the second quarter and the weak economy could persist, said Monday an economist working for the government.

“The slowing trend of the economy is far from over,” said Wang Jian (王建), who works for the National Development and Reform Commission (NDRC).

According to Wang Jian, China’s economy suffers from weak demand and excess capacity. “The second quarter growth would most likely fall below 8%,” he added without giving a more accurate prediction.

Economists expect a growth rate of 7.9% between April and June. This would be the first time for the indicator down below 8% since 2009, a level considered by many investors as the minimum growth necessary to ensure a sufficient number of jobs created.

Last week, the government newspaper reported that China would speed up the approval process for infrastructure investments in the hope to fight against a slowing economy.

On 13th of May, for the third time in six months, China has lowered the bank reserve ratio, thereby increasing their lending capacity of 400 billion yuan, a measure to avoid the risk of a sharp slowdown in the second largest economy.

The government should not launch a large-scale recovery plan, contrary to what it had done in the wake of the 2008-2009 crisis, said Wang Jian.

Authorities will be more cautious in their decision on the matter since there is a power transition at the top of the State, President Hu Jintao and Premier Wen Jiabao to give the reins to current vice president Xi Jinping and Vice Premier Li Keqiang in early 2013.