China's boom beginning to show cracks: Analysts

Discussion in 'China' started by lambu, Jun 22, 2011.

  1. lambu

    lambu Regular Member

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    SHANGHAI: New economic analyses of China provide further indication that the nation's supercharged economy is beginning to slow, and warn that soaring inflation, rising labor costs and mounting local government debt threaten to weaken growth even more.

    Several economists in China have recently lowered their growth forecasts for this year and next year to about 8.5 per cent, down from earlier forecasts of 9 per cent to 10 per cent, while also warning about the possibility of a sharp rise in nonperforming loans at the nation's big state-owned banks.

    On Monday, for instance, Credit Suisse said data recently released by the Chinese central bank showed that credit in China had expanded at "alarming levels," far more than previous government estimates suggested. Credit Suisse downgraded its profit forecasts for Chinese companies and state-owned banks, as it warned of slowing growth for the overall economy.

    The reports come at a time of heightened concern about slower growth in other parts of the world, including the United States, Europe and Japan.

    Since the financial crisis, China has been the world's leading growth engine. But for much of the past year, China has been trying to rein in overly aggressive bank lending as a way to tame soaring inflation and property prices.

    Those tightening measures have not only weakened growth in China, analysts say, but have also begun to expose a host of other problems in the nation's financial system.

    While few analysts expect China's growth to slow to below 8 per cent in the next year, they still paint a troubling picture. The Chinese stock market has been in a slump for much of the last two years, the property market looks weaker and inflation is running at a 34-month high.

    Analysts said exports have begun to show signs of weakness in recent weeks. Credit Suisse said Monday that China's export growth could be flat in the coming months, partly because of weaker demand in the United States and Europe.

    follow link for detailed article ....

    China's boom beginning to show cracks: Analysts - The Economic Times
     
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  3. huaxia rox

    huaxia rox Senior Member Senior Member

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    chinas economy is indeed beginning to slow mainly coz the govs been trying to curb the inflation but growth rate down to or below 8% will be impossible unless some major (natrual or economic)disasters take place.

    to keep a proper GDP growth rate is difficult when some big economies r not fully recoved and oil price and other raw materials prices r going very high.
     
  4. Godless-Kafir

    Godless-Kafir DFI Buddha Senior Member

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    The doom Sayers who are either afraid or jealous of Chinas rise will naturally predict doom for Chinas growth, they said the same for Japan and SK in the 70s and it never happened. Whatever slow down that is happening is not particular to CHina, Industries across the world have slowed down and consumption has gone down as well.

    Frankly i would like to see China do well but with out the anti-outsiders and anti-india stance.
     
  5. nimo_cn

    nimo_cn Senior Member Senior Member

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    This is a hard time for every country, every country is having problem with their economies. What makes China different is China's problems are highlighted.
     
  6. Godless-Kafir

    Godless-Kafir DFI Buddha Senior Member

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    Thats a wrong statement, Europe and USAs problem is far far more in the lime light than Chinas problem.
     
  7. huaxia rox

    huaxia rox Senior Member Senior Member

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    China's manufacturing sees sizable slowdown

    By Chen Jia (China Daily)
    Updated: 2011-06-24 07:50

    Concerns about hard landing aren't warranted, according to economists

    BEIJING - China's manufacturing activities stagnated in June in response to the 10 months of consecutive tightening measures, HSBC Holdings PLC said on Thursday.

    It is too early to say whether the world's second-largest economy will suffer a hard landing, analysts said.

    HSBC's Purchasing Managers' Index (PMI) dropped to an 11-month low of 50.1 in June, compared with the final official reading of 52 in May, indicating a sizable slowdown in the country's manufacturing growth, according to the HSBC report.

    The HSBC's PMI is published monthly by HSBC, approximately one week before the China Federation of Logistics and Purchasing (CFLP) releases the final PMI. A reading above 50 means an expansion in the manufacturing sector, while a reading below 50 indicates contraction.

    A sub-index of manufacturing output released by HSBC decreased from 51.6 in May to 50 in June.

    Qu Hongbin, HSBC chief economist of China and co-head of Asian Economic Research, said that the government's tightening measures and the decreasing demand from external markets led to a decline in the Chinese manufacturing sector.

    "The ongoing inventory de-stocking also slowed the output growth," said Qu.

    China's consumer price index (CPI), a key indicator of inflation, jumped to 5.5 percent year-on-year in May, a new peak in almost three years, and the central bank raised the required reserve ratio for commercial banks, the sixth time this year, on June 20.

    Under the tight policies, the country's economic growth showed a continuous slowdown since April. The official PMI was 52.9 in April and 53.4 in March.

    This continued drop in the HSBC PMI indicates that the government's measures to tame high inflation have taken effect, said Wang Jun, an economist at the China Center for International Economic Exchanges, a government think tank.

    Wang said the tightening monetary policies may not ease in the short term because the nation's inflation is likely to climb higher in the future. He predicted the CPI figure to exceed 6 percent year-on-year in June.

    Although the HSBC PMI declined, it still showed an expansion in the manufacturing sector but at a slower rate, according to Wang.

    "I don't worry about a hard landing. The second quarter GDP is likely to stay above 9 percent," he said.

    "Hard-landing worries are unwarranted," said the HSBC economist Qu. "The good news is that inflationary pressures started to ease in June amid slowing demand."

    Ding Shuang, an economist with Citibank, said in a research note that slower growth is necessary to keep inflation under control, given China's current economic structure and investment-driven growth model.

    China Daily

    (China Daily 06/24/2011 page13)
     
  8. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    China construction boom may be stalling: SocGen

    HONG KONG (MarketWatch) — China’s construction boom could be stalling out, according to Societe Generale, which sounded a warning Friday that recent softening in demand for cement and earth-moving equipment could be an early warning of a looming downturn.

    “We believe the current pace of construction activity is unsustainable and a painful adjustment will come sooner or later,” SocGen analysts said in a research note.

    Premier Wen Jiabao visits Europe as the region grapples with a debt crisis centered in Greece. China’s leaders are expected to discuss euro-zone debt and how to help restore confidence in the markets.

    Among the signs cited of a major slowdown, SocGen pointed to sales of excavators, which fell 65% in May from a year earlier to 14,000 units. Sales of bulldozers and loading equipment were also down sharply from May 2010, it said.

    The French bank also raised concerns that cement consumption had outpaced rates that could be considered healthy.

    China accounted for about 55% of cement consumption globally in 2010, equivalent to 1,400 kilograms per capita, compared to a world average of 300 kilograms when excluding China.

    A nationwide building boom last year saw the completion of 1.8 billion square meters of new apartments and condos — equivalent to Spain’s entire housing stock.

    The boom yielded 60 million new homes, outpacing the needs of 20 million residents that migrated from rural to urban areas, SocGen said without specifying the time frame.

    At current rates of construction, however, China is on track to deliver housing for an additional 300 million city residents by 2015 — a level that would match what the International Monetary Fund forecasts China’s urban needs to be in 2030.

    Adding to the evolving bubble is Beijing’s target of building 36 million units of affordable housing as part of the government’s five-year plan ending in 2015, SocGen said.

    A slump in China’s construction activity could send industrial commodity prices sharply lower, negatively affecting the mining industry and forcing cuts in new equipment orders for the sector.

    The situation has shades of a perfect storm, as capital-goods suppliers in the U.S., Japan, and Europe could face diminished demand from China as well as increased competition from China’s homegrown equipment makers that are increasingly looking beyond domestic borders.

    http://www.marketwatch.com/story/china-construction-boom-may-be-stalling-socgen-2011-06-24
     
    Last edited: Jun 25, 2011
  9. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    Chinese economy has been a lie all along. How does manufacturing contract 50% and you still expect 9% growth??
     
  10. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Fixed asset investment, build more to make up for a stagnant economy. Real in the short, fake in the long term.
     
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  11. huaxia rox

    huaxia rox Senior Member Senior Member

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    i dont know where u can get the idea of our manufacturing contracting 50% but wheath chinas economy has been a lie to some extent can be verified.

    1 u can get lots of data from CIA year book who is monitoring the situations in every nation every single year on by and large every nations GDP data etc.....this agent cant be a basket case can it? if u dont believe PRC gov or IMF or WB....

    2 there is cucial data from parties other than PRC. like the consumptions from oil...gas to car (say....GM's not some homemade brands) to iphones or nokia phones.....many international companies like mcdonald have been doing the math that can indirectly prove the growth of PRC on these has been there for a long time.

    3 u got all the keyhole satellites and so forth.......if u observed some buildings (like the ordors ghost town that really has been catching eyes lately) and roads being constructed u woudnt need to believe it (i do though).....but when u can also see many new cars on the roads now....many new trains and planes that r running any single day.......u should begin to wonder can all those be faked???

    4 actually its really ur own choice to believe anything and indeed there have been articles saying chinas economy is not real for like decades (accoding to which PRCs economy should have collapsed for more than a hundred times and chinese refugees should have arrived in india i reckon)but on the other hand mainstream media and academics still believe PRC has been the 2nd economy in the world since last year....so when there r different views on 1 thing.....u in fact need to choose who u wanna believe......
     
  12. huaxia rox

    huaxia rox Senior Member Senior Member

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    1 the current situation in china is coz the govs been trying to curb the inflation and house prices.....the slowing down is not something like.... we need a huge growth but cant make it....

    2 there r serious problems in our econmy on the other hand....but many problems r not our own problems....some other nations r either faced with the same things or actually caused them.......
     

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