Government data published Thursday showed the Chinese economy grew by 11.4 percent in 2007, the fastest pace in 13 years, but cooled slightly towards the New Year, as the alarm bells over the US economy got louder.

"We would expect that a slowdown in the world economy is going to affect China quite a bit," said Louis Kuijs, an economist with the World Bank in Beijing.

"It's going to reduce exports and it's also going to affect the appetite of Chinese businesses to invest in the trade sector," he said.

China's economy expanded 11.2 percent in the fourth quarter, down from 11.5 percent in the third.

This comes as concerns are growing across the globe that the fallout from a US housing market crisis will force the world's biggest economy into recession and possibly bring the global economy grinding to a halt.

These worries were echoed Thursday as China released highly anticipated key figures for economic performance in 2007.

"The United States and China are the main engines of global economic growth and a slowdown in the US economy will have an impact on the world economy," said Xie Fuzhan, director of the state statistics bureau, in unveiling the data.

"We will adopt appropriate measures to, as much as possible, reduce the negative impact of the US economic slowdown," he told a briefing in Beijing.

It may have been the first time in months that a senior Chinese official talked about the need to bolster economic activity, rather than rein it in.

Since early last year, amid mounting signs of rising inflation, China has pulled all available monetary levers to slow economic growth, not spur it on.

The measures include six interest rate increases and 11 reserve ratio hikes, but with little obvious effect on the world's fastest-growing major economy.

However, it now appears increasingly likely that growth rates could be moderating, not so much because of anything the politicians in Beijing have done, but because of the impact of global economic trends.

It is not immediately obvious from the headline figures. China's trade surplus soared 47.7 percent in 2007 to reach 262.2 billion dollars.

But the data also showed a marked deceleration as the year progressed. In the last three months of 2007, the trade surplus increased by a relatively modest 12 percent, previously published statistics indicated.

"Beginning from the fourth quarter, the trade surplus was rather small," said Xue Hua, a Shenzhen-based analyst with China Merchant Securities.

"The main factor is weakening exports to the United States, but exports to Europe and Japan have also slowed down," he said.

One of the key questions now is whether if exports will continue to lose momentum.

JPMorgan predicted export growth of 19 percent this year, down sharply from 27 percent in 2007, but warned the decline could be even steeper.

"There is downside risk to our export growth figure if global growth turns out to be worse than expected," said Frank Gong, a Hong Kong-based economist with JPMorgan.

This means that the role of exports, traditionally a main generator of growth in the Chinese economy, could be virtually nil in the coming 12 months, some analysts argued.

"The contribution of net exports to economic growth may be zero in 2008. This means that the trade surplus may not grow at all," said Wang Tao, a Beijing-based economist with Bank of America.

Community
Email This Article
Comment On This Article

Related Links
The Economy

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News