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Friday 16th of July 2010
July 15, 2010    

Chinese economic growth slows in Q2

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by Kay Murchie

It appears the world’s third largest economy is cooling after official figures revealed Chinese annual GDP slowed from 11.9% in the first quarter to 10.3% in the March to June period, the National Bureau of Statistics (NBS) said today.

The reading was marginally lower than the 10.5% expected by analysts.

China’s economy has been growing at an alarming rate and analysts recently cautioned that the economy has been expanding too quickly.

However, today’s data should allay fears and the slowdown in growth is likely to continue for the remainder of the year, according to experts.

In the meantime, factory growth fell more than expected in the year to June, by 13.7% - below forecasts for 15.3%.

There have been fears of high inflation in China but this has also eased to 2.9% in the year to June from 3.1% in May.

With growth slowing and inflation easing, HSBC and Barclays Capital believe there will be no further interest rate hikes this year.

In related news, earlier this week it was unveiled Chinese exports grew by 43.9% in June compared with a year earlier.

The figure, which exceeded expectations, comes after China overtook Germany as the world’s biggest exporter earlier this year. Germany had held the top spot since 2003.

Meanwhile, imports increased by 34.1% year-on-year in June.

As a result, China posted a trade surplus of $20.02 billion in June, according to the Chinese customs authorities.

It is the first trade data to be published since China let its currency, the yuan, trade more freely against the US dollar.

Since 19 June, the yuan has gained 0.8% against the dollar.

The US has long been arguing that China is keeping the value of the yuan low to help its exporters at the expense of overseas competitors.

In the meantime, other figures today revealed that Chinese property prices fell last month for the first time in more than a year.

The figures have raised concern and will also lead to a sharp slowdown in the latter half of the year.

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