China GPD: nothing to celebrate

China’s gross domestic product expanded 7.6 percent last quarter from a year earlier, the slowest pace since 2009. At first glance, this is a bad news since shows it will be difficult to the country revert the economic global weakness compensating the fragil demand from Europe and the United States. However, the GDP slowdown was in line with the analysts expectations.

But the lower Chinese demand could affect other Asian economies, which supply the country with commodities, as much as the oil, coal and iron ore producers such as Brazil and South Africa, for instance. Canada is pretty exposed to Chinese economy too. Last year, Canada exported C$ 16,788 billon to China – 30% were woodpulp and ores.

The figures released last week shows Chinese economy is slowing faster than the government would like.  Some days ago, Wen Jiabao, premier from China, said Chinese economy faces downward pressure, and suggested the country can introduce more stimulus to keep growth on track, which might help to mitigate concerns. The People’s Bank of China on July 5 announced the second interest-rate cut in a month, adding to the first since 2008.

In some extend, the slowdown on Chinese economy occurs because the country decided to embrace different kinds of measures to avoid inflation, which rates were growing fast. According to a report by Haibin Zhu, Grace Ng and Lu Jiang, economists from JP Morgan, China GDP is going to improve significantly since August.

But the slower China GDP growth shows the country’s economy is taking a soft landing as the Chinese authorities and all the economists are expecting. Besides that the loans have advanced 16% in the country in May. Then, some economists believe China is not as disastrous as people have been feared. So far, there’s nothing to be horrified, but there’s no reason to celebrate as well.


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