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Monday, 26 March 2012

Does China's Economy Have A Small Puncture?

China is the world’s second largest economy. China is also the world’s fastest growing economy but recent events suggest that things are about to change. For 2012 China has set its lowest growth target for the country (since 2004) at 7.4%. In March China’s manufacturing activity suffered its fifth monthly fall.  A fall in manufacturing will impact on China’s economy because manufacturing has made a big contribution to the economy’s success.
China has been exporting a large percentage of the goods it makes, so a drop in export demand will affect its economy. China’s largest exports are to the USA and Europe. Unfortunately for China both of these areas have been experiencing economic problems for a number of years. Recently the US and some European countries have had their credit ratings slashed. Whilst Italy and Greece have implemented emergency economic measures and the Republic of Ireland went back into recession at the end of 2011.
A slowdown in China is a concern for countries like New Zealand who export dairy goods to China. A slowdown also causes concern for analysts who believe that a global economic recovery will require a strong economic performance from China. Others may argue that China's recent action to cool down its property market is evidence of China's decision to opt for sustained growth instead of speedy and uncontrolled growth and it's not time to panic. Only time will tell who is correct. 

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