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| China's Economic Growth or Demise |
The risks associated with the US 'Fiscal Cliff' to take $600 Billion out of the economy in January 2013 coupled with a slower than anticipated recovery and all the European debt problems are impacting export growth from China to 2.9% last month instead of a predicted growth of 9%.
Although exports have been steadily declining imports of commodities: crude oil, iron ore and copper surged; this activity confused analysts to believe that higher imports of these commodities would lead to increased exports of finished products such as mobile phones which currently account for about a billion gadgets a year. But domestic growth is still rallying at a pace so far of 14% in retail sales and 20% in building infrastructure such as factories, bridges and hospitals. But the cost of vegetables rocketed by 14% which will eventually impact domestic sales of finished products.
It may be said that China's internal market is still lagging behind the affects of recession and austerity measures imposed in the Western World. Despite the gloomy outlook for Europe and America the OECD are predicting 8.5% growth in China's economy next year. However as retail prices rise and exports slow down forecast growth may be down-graded. Another factor to watch is the fact that mobile phones are an important export driver which may be impacted by businesses moving their manufacturing operations back to the U.S. as middle income wages decline and the political climate goes against firms who out source manufacturing overseas for example Apple Iphones.
It may be argued that as China's economy tracks the economic woes of America and Europe over a protracted period resulting in higher property and retail prices social unrest may lead to political instability. Perhaps this is why the Bank of China released a 1.2 Trillion Yuan lending stimulus package.
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