Is China Slowing Down? Not Much, For Now4 May, 2011, 0:48. Posted by Zarathustra
Tags: Economy, Inflation, Recesssion
Jim O’Neill of Goldman Sachs Asset Management, who popularised the acronym of BRIC, used to be quite sanguine about China. So it came as a bit of a surprise that he became a bit worried about China. As he wrote in his latest note that he is worried that “China runs some risk of slowing things too much”, although he was sure that his concerns will turn out to be temporary.
Some indicators are pointing to some slow down. For instance, the purchasing manager’s index is hovering around the recent low level while input price sub-index is, although easing a bit, still stubbornly high.
Source: China Federation of Logistics and Purchasing
On the other hand, GDP has not slowed much in the first quarter, and China has recently raised its power consumption target. Power consumption matters as most people regarded the GDP numbers have massaged by the government, and electricity usage is probably a better indicator.
Inflation is certainly still high, and is expected to get even higher in the coming months. Not to mention that property prices are still staying pretty firm.
Source: National Bureau of Statistics
On the whole, China’s economy might be showing some signs of slowing down, though not much for now. More tightening is expected, and eventually the economy will be slowed down when the tightening is enough.