Although China’s economy is doing well relative to other economies around the globe they too are facing slowdowns. On the surface, economists at the International Monetary Fund and most banks are still estimating China’s growth rate to be over 9 percent this year. China continues to run very large trade surpluses. And yet, the country’s huge manufacturing sector is starting to slow and orders are weakening, especially for exports. If China does allow its currency to rise more quickly and if its trade surplus narrows, that could help economies elsewhere. Chinese exporters are particularly worried. As global stock markets have tumbled, the Shanghai A-share stock market has fallen 14.7 percent since July 15. The most worried economists are those who follow China’s manic monetary policy. Orchid Chen, the sales director of the Fujian Yuandong Electric Motor Group, which makes motors in Fu’an in southeastern China’s Fujian Province, said that banks were strictly following Beijing’s instructions. China has been highly successful in creating jobs and shifting unemployment to other countries through its intervention in currency markets. Many large American companies rely heavily on imports from China and are lobbying against the legislative push. Within China, domestic demand is starting to weaken slightly. A government survey released on Sunday showed that prices had fallen in August compared to July in 16 cities, notably Chongqing in western China.
What more can they expect? China can’t expect to continue to with massive gains as other countries who buy their goods suffer in this global recession. You can’t make money if there is no one to buy your products. China should allow their currency to appreciate to help other economies gain footing. This would offset their deceleration.
http://www.nytimes.com/2011/09/24/business/global/chinas-economic-engine-shows-signs-of-slowing.html
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