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