Chinas Economic growth rate slips

As expected, the tightening of non essential spending in the west has led to the Chinese government to declare that its growth rate has fallen to below 10% for the first time in several years….all the way down to 9.9%. Some predict it could fall further to (wait for it) 8% next year!

This isn’t a surprise and it’s not a huge shock. China has very different fundamental to Western economies. For a start, it has a lot of savings. This will provide the economy a nice buffer against any downturn. Second, it doesn’t need to raise capital. The banks in China never got involved in many of the high risk games of their western counterparts. Even though the Chinese people are going through a stock market bust that has seen over 65% wiped off the value of Chinese shares and a property bust in once popular property markets like Shanghai and Beijing, the savings are still there…roughly $1.3tr in USD alone.

Secondly, the needle of the internal Chinese consumption engine is still in the red…their growth rate, though slower, is still electrifying. That being said, steel and other heavy industries are showing weakness form declining consumer demand at home and textiles and toys are showing weakness from declining demand abroad, particularly in the west. Recently, China closed 10,000 factories in a single city, but their government driven infrastructure projects continue as before…at a blistering pace.

It wouldn’t surprise me one bit to see China held up as a shining example to the West after the crunch has run its course. The hard working, saving, family orientated (and obedient…!) Chinese will be a model for us all. It’s only a matter of time before a politician tells us to “take a leaf out of Chinas book”.

• Interesting Facts: Volume 1 [/caption] WORLD FACTS Who Made The Marree Man? facts 60...
• The Biggest Polluter on the Planet: SEX Thomas Friedman's follow-up to "The World is Flat" is currently...
• Diplomatic frenzy at final day of UN climate talks [/caption] By MICHAEL CASEY and JENNIFER LOVEN, Associated Press Writers...

Tags: China, Economic Growth, Economy, Global Economy, Property Markets