The Chinese economy seems to have hit bottom in the second quarter of 2012 and will grow at 8 percent across the year, according to a report released by the Bank of China Ltd on Monday.

Although the economy is still cooling, third-quarter growth is expected to be 7.7 percent, slightly higher than the 7.6 percent growth in the second quarter, the report said.

"We see signs that indicate the ongoing destocking among manufacturers is coming to an end. Destocking in China usually lasts six to nine months, but this time around it has already lasted for 10 months," said Cao Yuanzheng, chief economist at BOC.

A steel plant belonging to Dongbei Special Steel Group Co Ltd in Dalian, Liaoning province. A Bank of China report said the country's economy will grow by 7.7 percent in the third quarter, slightly faster than the rate of 7.6 percent seen in the second quarter. [Photo/China Daily]

Policies designed to stimulate the economy are likely to see GDP growth rise to 8.2 percent in the fourth quarter, resulting in the forecast 8 percent growth across the whole year, a figure higher than the official government target, the report said.

"The tottering global economy has affected China throughout 2012 and there is little chance of a strong rebound in the long term," said Li Jianjun, an analyst at BOC's Institute of International Finance.

Chinas' foreign trade is likely to register a single-digit growth rate this year as external demand has been cooled by the global economic slowdown. The report forecasts export growth throughout the year will stand at 6.3 percent, below the official target of 10 percent, while import growth will slow to 6.2 percent.

The world's second-largest economy has shown signs of losing steam with second quarter GDP growth of 7.6 percent, the lowest in three years.

Growth in industrial production weakened from July's 9.2 percent to 8.9 percent in August, also a three-year low, stirring calls for the government to announce more stimulus measures.

International ratings agency Standard & Poor's on Monday lowered its forecast for China's GDP growth rate to 7.5 percent from its previous 8 percent.

Andrew Palmer, an analyst at S&P, said the cut was generated by acknowledgement that the central government will not roll out a stimulus package on the scale that it did between 2008 and 2009 to guarantee a growth rate of 8 percent, as it is aware of the negative effects that last round of stimulus had, including pushing up inflation and property prices.

China's manufacturers and retailers are less optimistic about sales than they were three months ago and more companies are cutting jobs, Bloomberg reported on Monday, citing a survey named China Beige Book. New York-based CBB International interviewed more than 2,000 company executives and bankers for the survey.

Most other sectors show more resilience and greater confidence than manufacturing. Transport was the most optimistic sector of the economy in the third quarter, while the services sector in general is upbeat.

"Our China leading indicator suggests further weakness in September, but we expect macro data to surprise on the upside in the fourth quarter, supported by a pickup in infrastructure and housing investment," said Zhang Zhiwei, chief China economist at Nomura Holdings Inc.

Nomura's China leading index continued to drop in August, as eight of the nine components weakened.

The HSBC Flash China Manufacturing Purchasing Managers' Index, a key indicator of manufacturing activity, rose slightly to 47.8 in September from its August reading of 47.6, but still fell below the expansion line of 50.

Chang Jian, a China economist with Barclays Bank, said the reading supports the forecast that real GDP growth is likely to slow to 7.3 percent year-on-year in the third quarter.

But some sub-indices suggested slowdown in demand appears to be stabilizing on the back of various, albeit modest, supportive domestic measures and possibly stabilizing, but still weak, external demand, which would contribute to industrial restocking from 2013, Chang said.

Despite some pickup in quarter-on-quarter momentum, year-on-year GDP growth is likely to slow further before stabilizing at 7.2 percent in the fourth quarter and picking up to 7.8 percent in the second half of next year, she said.

wangxiaotian@chinadaily.com.cn