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Tuesday, September 11, 2012

China continues to deliver poor economic numbers

This year continues to be a rough year for China. The ghost towns are still there, demand for raw materials is sagging, the critical 8% growth rate is slipping and now exports are also slowing along with internal consumer demand.
Again, for almost any other economy many of the numbers would be impressive but in the case of China, the numbers are both disappointing as well as reason for concern. For years the economic growth has been the key to social stability so when the growth disappears, the future is much more in question. To date, China has refused to implement a second stimulus though as the numbers get worse, that may be necessary. It also may be too late.

What next?
Exports grew 2.7 percent year-on-year last month, below the 3 percent forecast in a Reuters poll, confirming President Hu Jintao's warning of the "grave challenges" posed by the world economy.

Data for imports was even worse, showing a fall of 2.6 percent on the year in August, compared with expectations for a 3.5 percent rise. The number will solidify market expectations for further stimulus and monetary easing to support growth as China heads towards a once-a-decade leadership change later this year.

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