China Growth Slowing Down

China Q2 GDP growth was reported at 10.3%, slowing down from Q1 growth rate of  11.9%. The slowdown came despite exports were stronger in Q2, meaning internal demand has weakened.

Chart 1. China GDP Quarterly Growth¸

Source: Bloomberg

Urban fixed assets investments growth rate also slowed down to 23.5%. The May reading was at 25.9%.

Chart 2. Fixed Assets Investment

Source: Bloomberg

Inflationary pressures are slowing down. Consumer price inflation in June was at 2.9% vs. 3.1% in May. June producer price inflation was at 6.4% compared with 7.1% in May. Again producer prices are growing faster than consumer prices squeezing profit margins.

Chart 3. Producer & Consumer Price Indexes

Source: Bloomberg

Industrial production growth also decreased  to 13.7% in June vs. 16.5% in May.

Chart 1. China Industrial Production

Source: Bloomberg

All in all, question remains is this slowdown a result of intentional tightening induced by Chinese government or is the Chinese economy growth slowing down because of its unsustainable structure.

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This entry was posted on Thursday, July 15th, 2010 at 4:07 am and is filed under China. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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