All Eyes on China
China put on an impressive and renewed face to the world during the Olympics. Yet strains in the mask are showing as China’s economy, and those in surrounding regions, begin to cool off. This chill should be taken in relative terms, given that any number of western economies, especially the United States, would love to have a slowdown where GDP growth still hits 10.4 percent, down from 11.9 percent two quarters ago.
The numbers are worth watching, since U.S. based retailers and manufacturers are so dependent on the inexpensive goods and services generated in China.
While China’s numbers for the next 12 months are expected to sink, partly due to its interdependence on slow western economies, a number of question regarding long-term resiliency come to mind. These questions center around the poor performance of the Chinese stock markets, as well as China’s foreign currency and foreign investments exposure. Concern is also beginning to mount around China’s internal inflation rate and the resulting domestic political consequences.