US firm confident of China's economic rebound

Beijing, Aug 13 (IANS) Caterpillar, a US-based construction equipment maker, is confident that China's economy will experience a soft landing, as the government has taken appropriate measures for an economic rebound, one of the company's top officials who is also in-charge of India said Monday.

Kevin Thieneman, country manager of Caterpillar China, India and ASEAN, told Xinhua in an interview that the Chinese government is taking the appropriate steps to drive a rebound in economic growth by the fourth quarter of this year and in 2013.

China's economy expanded 7.6 percent year on year in the second quarter of 2012, slowing from 8.1 percent in the first quarter. The growth rate marked the sixth consecutive quarter of decline and was the slowest pace since the first quarter of 2009.

"Our corporate forecast for China's GDP growth is right at 8 percent," Thieneman said.

This forecast is higher than the 7.5-percent target set by the government.

Earlier this year, China pared its gross domestic product growth target for 2012 to 7.5 percent from 8 percent in the face of a persistent slump in the US and spreading debt woes in the European Union.

To buoy the economy, China has adopted a string of pro-growth measures, including lowering banks' reserve ratio to boost lending, subsidizing energy-saving household electrical appliances and speeding up approval for major construction projects.

"With China's interest rate cuts and the reduction in the reserve ratio, as well as the recent announcement of stimulating infrastructure investment, we are very confident that we'll see a soft landing in China," Thieneman said.

However, as the economy slows, Caterpillar has felt some changes due to thwarted demand.

"In the first half of 2011, our industry reached a record high. As we came into 2012, we thought the industry would continue to grow, so we tooled up our factories, our suppliers are ready to go and we build according to a higher level of demand," Thieneman said.

As a consequence, the company ended the first half of 2012 with a relatively high level of inventory and had to align its production with demand in China and divert its finished goods inventory outside China.