BUSINESS: China’s Economic Growth Stalls

Fresh fears about China’s economic slowdown have prompted share prices to stall on the country’s main markets. unnamed (22)

The Shanghai Composite Index was up slightly at 2,995.41 in afternoon trading, after dipping by 0.3 per cent to 2,983.06 over the course of the morning. Hong Kong’s Hang Seng dipped 0.1 per cent to 20,501.48, after falling 0.4 per cent earlier in the day.That marked the 18th consecutive monthly decline, suggesting that domestic demand remains weak despite a rise in infrastructure spending.

Economists had expected exports in April to fall by just 0.1%, after a surprise 11.5% rise in March.They had also expected a smaller slide in imports, 5%, after a 7.6% decline in March.Zhou Hao, of Commerzbank in Singapore, said: “Both exports and imports came in weaker than expected, in line with the soft trade performance across Asia, pointing to another challenging year for emerging markets … some sort of market correction might be inevitable.”China’s exports to the United States – the country’s top trade partner – slid by 9.3% in April, but those to the European Union increased by 3.2%.

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China economic expert Arthur R Kroeber told the New York Times that government intervention could be the problem, not the solution for China’s economic woes. Successful companies need “space” to develop and not to be controlled, he said.

“When the stock market crashed, rather than allowing a bust – which you should, if you really want more market forces – the government opted to intervene, ordering state firms to buy shares to keep prices artificially high,” he added.”Now it’s trapped, because the state firms that bought these shares can’t sell them without triggering a panic sell-off.”Kroeber also pointed to an ideological clash between President Xi Jinping and more radical thinkers over the country’s exchange rate, saying the central bank wanted a “flexible rate that will help it set monetary policy in the normal way”.

The official purchasing managers’ index (PMI) showed a marginal expansion last month, but Caixin’s survey found the 14th consecutive month of contraction in the sector.Beijing has said it will take steps to boost exports, including encouraging banks to increase lending and raise tax rebates for some companies.China increased its share of world exports from 12.3% to 13.8% last year, meaning that its export sector remained competitive despite higher costs.

The President and other “stability-oriented people” in China’s ruling Communist Party, however, want to keep the rate stable because “if it’s not stable, then people will think that China isn’t stable and that will be bad”.

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Chukwuyem Ogala is a content writer at Edliner. A multifaceted personality with a degree in Economics. He has a strong passion for Rap music and sports. A big fan of the NBA, likes Rafael Nadal and has a crush on Serena Williams. Chuks just strives to be better and wants to be heard globally.

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