HONG KONG ? Is China?s economy in trouble, too? As the U.S. economy appears to teeter on the edge of another recession, Europe struggles with a financial crisis and emerging markets like Brazil and India show new weaknesses, China might appear to be in better shape than most countries, economists say. But ?better? is relative.
On the surface, economists at the International Monetary Fund and most banks are still estimating China?s growth rate to be more than 9 percent this year. China continues to run very large trade surpluses. New construction starts have soared with a government campaign to provide more affordable housing.
And yet, the country?s huge manufacturing sector is starting to slow and orders are weakening, especially for exports. The real estate bubble is starting to spring leaks, even as inflation remains stubbornly high for consumers ? despite a series of interest rate increases and ever-tighter limits on bank lending.
Because China?s mighty growth engine has been one of the few drivers of the global economy since the financial crisis of 2008, signs of deceleration could add to worries about the global outlook.
A survey of Chinese purchasing managers, just completed by HSBC and Markit Economics, shows a third consecutive month of contraction in the manufacturing sector. The release of the survey results Thursday contributed to a global slide in stock markets that day.
Meanwhile, huge loans that Chinese banks have made to state-owned enterprises and local governments over the past three years could cause trouble if the economy does slow.
What?s more, there are further signs of trade hostilities from Washington, where the impulse is to blame China?s cheap exports, at least partly, for the U.S.? continued high unemployment. On Thursday, a bipartisan group of senators announced that they would pursue legislation requiring the Obama administration to confront China more directly on currency policy. They want the White House to push harder for China to allow its currency, the renminbi, to appreciate.
If China does allow its currency to rise more quickly and if its trade surplus narrows, that could help economies elsewhere. But too much of a slowdown in China could simply add to the world?s financial gloom.
Chinese exporters are particularly worried. Nicole Huang, the sales manager at Dongguan Lianyi Sport Goods Co. Ltd., a maker of beer coolers, diving suits and other products in the industrial hub city of Dongguan, said the number of orders had dropped 5 percent so far this year, and the average size of each order had also begun to shrink.
And instead of the labor shortages that plagued many manufacturers last year as workers sought better jobs elsewhere, more people now seem willing to accept assembly-line tedium. Short term, that could help exporters. But it could be an early sign of looming unemployment problems.
Article source: http://economictimes.indiatimes.com/news/international-business/global-crisis-is-chinas-economy-in-trouble-too/articleshow/10104287.cms
Source: http://zaykar.com/2011/news-and-society/global-crisis-is-chinas-economy-in-trouble-too/
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