Growth 'slows' In China
The Age
Thursday April 17, 2008
CHINESE economic growth only "slowed" to 10.6% in the year to the March quarter, despite once-in-a-century ice storms and the global credit crunch.
Strong consumer spending and investment has helped compensate for a dramatic turnaround in the trade accounts, caused by a sharp drop in exports to the US. China's huge surplus shrank by 18% in the March quarter from a year ago, in terms of its currency, the yuan, according to Beijing consultancy Dragonomics. Net export growth slashed 1.4 percentage points from first-quarter growth after they added an extraordinary 3.5 percentage points in the first quarter of last year, Standard Chartered said.Chinese economic growth exceeded the average forecasts of market economists and reinforced the view that it has sufficient momentum to withstand a downturn in economies of the developed world. "China is not going to carry the world, but it's going to carry itself quite nicely," said Arthur Kroeber of Dragonomics. He said China would not save exporters who have relied on US consumers, but it would continue to power big mining countries such as Australia and help machinery makers such as Germany. "China does not substitute for US consumer demand, because its consumers aren't buying anywhere near the same quantity or quality," he said. "But what China and India have is investment demand for raw materials, machinery and other capital equipment, and if you're making that stuff, you're fine." Stephen Green, China economist at Standard Chartered, was sceptical of the official gross domestic product reading because industrial production had slowed and net exports had turned negative. "We think there's likely smoothing going on so as not to upset global markets and to forestall criticism of the monetary tightening policy," he said.
© 2008 The Age