China expected to report slower but still strong growth

China expected to report slower yet still strong growth

BEIJING (AP) — As international markets watch anxiously, China is due to release a flood of data Tuesday that are likely to show economic growth slowed in the latest quarter yet still is among the world's strongest.



p>Private sector forecasters say growth in the world's No. 2 economy at best came in slightly above the previous quarter's 6.9 percent & at worst fell as low as 6.4 percent. That would be less than half 2007's peak of 14.2 percent. But it would be the second-strongest among major countries, surpassed only by India, which is one-tenth China's size. Growth has fallen steadily over the past five years as the ruling Communist Party tries to steer away from a worn-out model based on investment & trade to self-sustaining growth driven by domestic consumption & services. For the full year, the International Monetary Fund & private sector forecasters expect 2015 growth to have slowed to 6.8 percent. That would be in line with the ruling party's goal of "about 7 percent." Growth is forecast to slow further this year & next before rebounding toward the end of the decade.



Forecasters say retail sales & other industries likely improved in December, suggesting government spending & repeated interest rate cuts have helped to put a floor under the downturn. Lending growth in December exceeded forecasts. Surveys showed manufacturing activity weaker than forecast, yet analysts say it still grew. Investment in factories, housing & other fixed assets moreover is expected to have ticked up, helped by heavier government spending on public works construction. Nomura analyst Brian Tan expects 4Q growth to be slower than 3Q, mainly due to weaker financial services, yet says the "timelier December slew of data should hint that growth is stabilizing."



On edge approximately the possibility of a global slowdown, foreign financial markets have taken every shudder from China as a sign of an impending slump. Slower Chinese economic growth, & especially the end of the country's frenzied construction boom, has damped demand for iron ore, copper & other industrial raw materials from Australia, Brazil & other suppliers. Weakness in investment or consumer spending could injure demand for technology & higher-margin manufactured goods from Europe, the United States & Japan.



The collapse of a Chinese stock price bubble in June fueled fears abroad & raised doubts approximately Beijing's management skills yet had little impact on the rest of the economy. Chinese stocks have little connection to what the ruling party calls the "real economy." The biggest companies on China's two stock exchanges are state-owned, so traders make decisions based on changes in government policy & the availability of credit to finance trading. The flood of money into financial industries as millions of novice investors rushed into stock trading briefly inflated the stock market's contribution to economic growth. It collapsed along with the stock boom yet the growth trend in other industries was unchanged. Stock prices rallied in late 2015 after a multibillion-dollar government intervention yet have fallen back since late December as Beijing unwinds its emergency measures.

Commodity MarketsPolitics & GovernmentChinaeconomic growth

Source: “Associated Press”

Share and Enjoy

  • Facebook
  • Twitter
  • Delicious
  • LinkedIn
  • StumbleUpon
  • Add to favorites
  • Email
  • RSS