China's slowing growth could hit India's exports

Discussion in 'Economy & Infrastructure' started by LETHALFORCE, Jul 18, 2010.

  1. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    http://www.thehindu.com/business/article518921.ece
    China's moves to bring back in control its rapidly over-heating economy appear to have paid dividends, with the economy showing signs of slowing in the second quarter of this year according to data released on Thursday.

    China's economy grew 10.3 per cent in the second quarter, down from 11.9 per cent in the first and 10.7 per cent in the last quarter of 2009, announced the National Bureau of Statistics (NBS).

    The economy's slowing-down follows a number of steps taken by the government in recent months, including phasing out the $586-billion stimulus spending, tightening curbs on lending and bringing in check spiralling property prices.

    Thursday's numbers were welcomed by Chinese officials but are expected to cause concerns globally, said economists, particularly because slowing industrial output could impact China's appetite for imports of raw materials.

    “A slowdown in the growth rate will benefit the economy because it will prevent it from growing too fast and being overheated,” said Sheng Laiyun, a spokesman for the NBS.

    Analysts said they expected growth to continue to slow through the rest of the year. Tom Orlik, an economist in Beijing with Stone & McCarthy Research Associates, said the government would now focus on preserving growth, having brought inflation under control. Growth would slow, but would not “collapse”.

    The Consumer Price Index increased 2.6 per cent in the first half of the year. Inflation in June dipped to 2.9 per cent, down from 3.1 per cent in May.

    “China's inflation in the first half was mild and within the range of management,” said Mr. Shen, referring to the government's three per cent target.

    Of concern globally will be China's slowing industrial output, which is likely to hit China's imports. Industrial output grew 13.7 per cent in June, down from 16.5 per cent in May.

    Fixed asset investment also slowed.

    Significantly for India, iron ore imports are expected to fall through the rest of the year, said economists, potentially hitting the country's biggest export to China and further widening a record trade imbalance.

    The first half of this year has seen Indian exports soar by 80 per cent, largely driven by iron ore and slag, which accounted for 63 per cent of total exports.

    But recent months have seen signs of falling demand for iron ore as a result of slowing industrial output, with some of China's biggest steelmakers announcing price-cuts in recent weeks.
     
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  3. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    http://www.marketwatch.com/story/ch...d-for-a-while-2010-07-15?reflink=MW_news_stmp

    Citi sees end to China's double-digit growth for at least a year
    HONG KONG (MarketWatch) -- China's 10.3% growth in gross domestic product during the second quarter is likely the last time the nation will post a double-digit economic expansion for at least a year, analysts at Citigroup said Thursday.

    "The gradual nature of the current slowdown is unlikely to produce a sharp policy response," Citigroup analysts led by Minggao Shen wrote in a note to clients after China announced its quarterly GDP and a slew of economic data for June.

    "Thus, if we're right that this downturn is a moderation rather than double-dip, then we may have seen the last double-digit GDP growth quarter in at least the coming year," they said.


    China could get a Goldilocks economy
    High Chinese growth with stable inflation could mean Asia's economic giant is not too hot, or too cold.

    Official data released earlier Thursday showed China's second-quarter GDP slowing from the first quarter, while increase in China's consumer and wholesale prices, retail sales and industrial production also moderately significantly in June. Read full story on China economic data.

    The slowdown across various economic indicators came as the government rolled back some of its growth-accommodative polices over the last few months to prevent asset bubbles, which economists believe are potentially more harmful to long-term growth.

    Analysts said the slowdown in the economy isn't necessarily a negative factor for markets.

    Earlier this week, BNP Paribas upgraded Chinese equity markets, among the worst performers in the world so far this year, to overweight.

    BNP's head of China and Hong Kong equities research, Erwin Sanft, said that although the brokerage expects China to enter a "moderate growth era" of between 5% to 8% economic growth between 2012 and 2030 after decades of rapid expansion, the slower growth was likely to improve China's risk profile.
     
  4. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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    I really don't see much problem in this as GoI is trying to step up the infrastructure spending so a significant portion will be used by us only
     
  5. badguy2000

    badguy2000 Respected Member Senior Member

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    well, what chinese economy is short of is nevery "accelerator",but "braker"
     
  6. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    when China s a cheap good exporter what are they going to accelerate??
     

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