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Another damper on China’s growth

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Die starken Wachstumsraten der Vergangenheit sind nicht aufrecht zu erhalten: Mitarbeiter einer chinesischen Schuhfabrik in Ganzhou. Quelle: Reuters

The strong growth rates of the past are clearly untenable : Members of a Chinese shoe factory in Ganzhou . Source: Reuters

HB BEIJING . The development of China’s economy is following the financial markets closely, because the country is the world’s growth locomotive. For fear of overheating , the government has recently initiated several braking maneuvers , a difficult balancing act. At the markets grew last concern against the government , the economy slows too much and thus lose some momentum as the global economy .

Today, there are a further indication that the end of the Chinese growth seems to come in sight : The official purchasing managers index fell from Sunday , according to 51.2 in July from 52.1 points. In order to move the barometer to the third month in a row on the threshold of 50 points that would signal the end of one of growth. Analysts had on average expected a decline to 51.1 points and made to usual seasonal effects.

"The Chinese economy will slow down mainly by the continuing tightening measures in the property market , but the slowdown is clearly not as bad as some expected , "wrote economist Ting Lu of the Bank of America Merrill Lynch in a customer communication. "We do not believe that the current situation requires a make or break fight to rescue the growth. "

The People’s Republic of expected this year on an increase in economic output by about 9.5 percent , although the pace of their estimation in the second half is somewhat lessened.

Given the reduction of state economic momentum gains , foreign demand for the development of Chinese economy in importance. It was probably the driving force in the coming months, said Brian Jackson of the Royal Bank of Canada. "If exports remain high, then the slowdown in China would remain moderate and do not require policy change.

If the weakness in the euro area and United States strongly weighs on exports , then China will likely come under pressure to ensure a new wave of investment .

For the second half of the government and economists expect about two percentage points less growth than in the first six months. From January to June was 11.1 percent above last year ‘s gross domestic product . Given the global economic crisis such a high value is a sign of overheating. In particular, the real estate prices make Beijing worried because they frustrate potential home buyers . There are therefore two set screws , which Beijing has tightened since spring : There are now requirements for higher payments for purchase and for a reduction in lending by the banks. The interest rate plays only a minor role in China because the government makes the banks guidance on the amounts that they can give a quarter.

Estimates by economists that more than 60 percent of the economy with the real estate and construction spending are connected. The inflow of fresh money from the banks is important in the high growth stocks there to maintain . The ordered reduction will therefore impact on investment and consumer demand have .

This could also play a role for the German economy . China was for many export companies rescuers in the most dangerous phase of the crisis – after leading German companies in 2009 goods worth 35 billion euros from the Middle Kingdom . The Volkswagen Group has sold in the first half of 2010 almost a million cars there , 46 percent more than last year. Immediately after the expiry of the European Recovery Program came just right . " China was the second home market for the Volkswagen Group, " said Winfried Vahland , president of Volkswagen China. He expected to continue its expansion , leaving the capacity by 2014 to about three million vehicles a year to double .