Global investors question China's future growth

Belief in China's continued economic growth has fallen at the fastest rate ever recorded by the Bank of America Merrill Lynch Survey of Fund Managers for February.

Just 7 per cent (net) of the global panel expect China's economy to strengthen in the coming 12 months - down from a net 51 per cent of respondents a month earlier and the lowest reading since March 2009.

This turnaround follows the Chinese government's decision to increase Chinese banks' reserve ratio requirements.

''At least in terms of investor growth expectations, China has experienced a 'double-dip','' said Michael Hartnett.

Two hundred fund managers, managing a total of $502 billion, participated in the global survey from 5 February to 11 February while 165 managers, managing US$355 billion, participated in the regional surveys. The survey was conducted by BofA Merrill Lynch Research with the help of market research company TNS.

Investors are positioning themselves for a halt in the economic recovery of both Europe and China. They have scaled back their growth expectations, retreated into cash and are increasingly sceptical that the European Central Bank (ECB) will increase interest rates in 2010.