China’s economy based on central command’s accounting, grew by 10.3% in the three months to the end of June 2010.
That is huge by any other country’s standard but still down from 11.9% in the first quarter, and well above the government’s 8% target.
The slowdown comes as the central government’s tremendous expansion in bank lending, comes to an end. Easy credit no more, the economy turns again to other lending mechanisms.
The government has also clamped down on property speculation and local government borrowing to defuse a housing and property bubble…
The growth figure was marginally below market expectations.
However, industrial production experienced a surprisingly sharp slowdown in June, to a growth rate of 13.7%, down from 16.5% in May.
Markets had expected that number to come in at a much faster 15.4%.
The Shanghai composite index ended the day down 1.9%, underperforming other major Asian markets.
Meanwhile, consumer prices (CPI) inflation also fell in June, to 2.9% from 3.1% in May, even though markets had expected a further rise to 3.3%.
The Chinese central bank targets 3% CPI inflation, and the unexpected drop means that it is now less likely to follow other Asian central banks in raising interest rates. Although the street lending rates unofficially have risen two fold.
But the standing committee of the Politburo and the Chinese government have been trying to cool down the economy to a level bellow 8% and seems they will be able to achieve that by applying the brakes even less from now on.
Yours,
Pano
PS:
The expected typhoon to hit China is certainly raising the stakes for the Economy too…
