Economy: Catching Another Cold?

Written July 14th, 2012 by

China Slows Despite Aggressive Stimulus

Amid growing concerns that China’s growth figures may be overstated, the National Bureau of Statistics announced July 13 that gross domestic product, economy, grew 7.6 percent in the second quarter, its slowest pace in three years. A slowdown in investment, including in real estate and infrastructure, the primary driver of China’s growth in recent years, plus a still fragile global economy, are hampering efforts to finesse a soft landing in the world’s second-largest economy.

“We continue to believe that China’s economy is not doing as well as the already downbeat official figures suggest,” says Mark Williams, chief Asia economist at London-based Capital Economics in a July 13 note. “Our view is that growth may actually have been weaker still—our China Activity Proxy points to growth of around 7.0%.”

The slowdown continues despite increasingly aggressive growth-boosting measures taken by Beijing. China’s central bank cut interest rates twice in the last month-plus and has reduced bank reserve requirements three times…

– Not too long ago it was the US catching a cold that would drive the rest of the global economy into states of pneumonia. How times have changed. With China’s charge to the upper levels of world class economies, it now, for better or worst, is in a position of affecting the global economy based on its own performance. While China has been a strong component in maintaining a sense of balance in the economic turmoil that has engulfed the US and European, it still need to work on its on internal consumption (the incremental version), as opposed to primarily relying on its export focus – Ed