(Yicai Global) Dec. 30 -- China’s gross domestic product is expected to rise at a record slow pace of around 3.2 percent in the fourth quarter while stabilizing economic policies are predicted to take effect in the following quarter.

GDP growth may fall below 3.5 percent to a record low of around 3.2 percent in the fourth quarter, sliding below the previous quarter's 4.9 percent expansion.

In the first quarter of 2022, the increase is expected to widen from the predicted annual addition of 3.2 percent in the fourth quarter and above the lowest quarter-on-quarter increase of 0.2 percent in the third quarter.

Amid growth pressures, the first half of next year will be the main period for stabilizing policies to take effect. There are possibilities of another requirement reserve ratio cut in the first quarter, as well as a loan prime rate decrease, and slashed interest rates for open market operations.

China’s production slowed in December amid environmental protection restrictions and the resurgence of the Covid-19 pandemic, which may drive the official manufacturing purchasing managers index down 0.2 percentage points from the previous month to 49.9 percent.

In December, the industrial added value could rise 3.5 percent from a year ago, with the pace of growth declining 0.3 percentage points from a month earlier. The total retail sales of consumer goods could climb 3.3 percent from a year earlier, with the growth slowing 0.6 percentage points from the previous month. Fixed-asset investment is expected to rise 4.8 percent from a year earlier, down 0.4 percentage points from November.

Exports in December are predicted to surge 23.5 percent from a year before, quickening the pace of rising by 1.5 percentage points from the previous month, due to the peak season of Christmas and new coronavirus variations overseas. Imports are likely to increase 29 percent, slowing growth by 2.7 percentage points from November due to the slowdown of commodity price hikes.

The industrial product price trend may be mixed in December. The producer price index is expected to jump 11.2 percent year-on-year, still lower than the 12.9 percent increase logged in November. The consumer price index could drop to 1.6 percent in December, down 0.7 percentage points from the previous month, due to agricultural products and gasoline price cuts.

New loans are expected to reach nearly CNY1.05 trillion (USD164.9 billion) in December, falling by CNY220 billion (USD34.5 billion) from November. Social financing may reach CNY2.2 trillion, edging up 10.3 percent from a year earlier.

(The author Lu Zhengwei is the chief economist of Industrial Bank)

Editor: Emmi Laine