The Australian
Rio ignores Chinese pessimism on growth
Edited by : AL CIRCLE
2 min read
RIO Tinto is putting little credence in China's proclamations that annual economic growth will slow to 7.5 per cent this year.
The Anglo-Australian miner, which has Chinese aluminium giant Chinalco as its biggest shareholder, says it still expects Chinese growth to be higher than 8 per cent.
The comments, made by Rio's head of business support and operations Bret Clayton at a conference in London on Thursday, indicate China's easing of its annual growth target for the first time in a decade has not affected Rio's publicly buoyant view on the world's biggest commodities buyer.
Premier Wen Jiabao said last week the Chinese economy would grow by only 7.5 per cent, down from 9.2 per cent last year.
China was encountering "new problems" and there was "downward pressure on economic growth and prices remain high", he said.
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Mr Clayton, Rio's former copper boss, told investors in London that while the global outlook was volatile and eurozone risks remained high, "Chinese gross domestic product (is) to grow by more than 8 per cent in 2012". Rio's assumption is not a surprising one as China consistently overshoots growth forecasts. Its target last year was 8 per cent.
HSBC analysts have said the lower 2012 growth target has been set to align with a 7 per cent average set in China's latest five-year plan, which started last year.
"We think Beijing has sufficient policy flexibility to support a growth rate above 8 per cent for this year and 2013," HSBC economist Sun Junwei, who is forecasting 8.6 per cent growth, said in a note written soon after Mr Wen's comments.
Adding to China's flexibility is easing inflation.
On Friday, China said its consumer price inflation had eased to 3.2 per cent, with analysts expecting it to continue the trend this year, despite Mr Wen's target of 4 per cent inflation.
"China's higher than expected inflation target for 2012 leaves room for an appropriate degree of monetary easing," said Jing Ulrich, JPMorgan's head of global markets, China.
Analysts are expecting at least another two reserve ratio requirement cuts of 50 basis points each this half.
"Other policy easing measures might emerge in the form of further tax reforms, new initiatives to boost domestic consumption, and higher levels of fixed asset investment in the country's central and western regions," Ms Ulrich said.
The Anglo-Australian miner, which has Chinese aluminium giant Chinalco as its biggest shareholder, says it still expects Chinese growth to be higher than 8 per cent.
The comments, made by Rio's head of business support and operations Bret Clayton at a conference in London on Thursday, indicate China's easing of its annual growth target for the first time in a decade has not affected Rio's publicly buoyant view on the world's biggest commodities buyer.
Premier Wen Jiabao said last week the Chinese economy would grow by only 7.5 per cent, down from 9.2 per cent last year.
China was encountering "new problems" and there was "downward pressure on economic growth and prices remain high", he said.
Top 50 Tech Rec Coverage
Mr Clayton, Rio's former copper boss, told investors in London that while the global outlook was volatile and eurozone risks remained high, "Chinese gross domestic product (is) to grow by more than 8 per cent in 2012". Rio's assumption is not a surprising one as China consistently overshoots growth forecasts. Its target last year was 8 per cent.
HSBC analysts have said the lower 2012 growth target has been set to align with a 7 per cent average set in China's latest five-year plan, which started last year.
"We think Beijing has sufficient policy flexibility to support a growth rate above 8 per cent for this year and 2013," HSBC economist Sun Junwei, who is forecasting 8.6 per cent growth, said in a note written soon after Mr Wen's comments.
Adding to China's flexibility is easing inflation.
On Friday, China said its consumer price inflation had eased to 3.2 per cent, with analysts expecting it to continue the trend this year, despite Mr Wen's target of 4 per cent inflation.
"China's higher than expected inflation target for 2012 leaves room for an appropriate degree of monetary easing," said Jing Ulrich, JPMorgan's head of global markets, China.
Analysts are expecting at least another two reserve ratio requirement cuts of 50 basis points each this half.
"Other policy easing measures might emerge in the form of further tax reforms, new initiatives to boost domestic consumption, and higher levels of fixed asset investment in the country's central and western regions," Ms Ulrich said.
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