CHINA’S POLICY ADJUSTMENT IN THE MAKING?

CHINA’S ECONOMIC SLOWDOWN TRIGGERS GUESSES ON POLICY MODIFICATION

Vivian Ni

China Briefing, October 21, 2011

Oct. 21 – China’s third-quarter economic statistics showed the lowest GDP growth rate in the past two years, according to the National Bureau of Statistics (NBS) on Tuesday. The continuing economic slowdown – amid the deteriorating external environment and slightly tamed domestic inflation – has made economists wonder whether or not some adjustment in the current tightening policy is approaching.

Slowdown in GDP growth
China’s GDP growth rate during the third quarter edged down to 9.1 percent, from 9.5 percent in the second quarter and 9.7 percent in the first quarter. The figure – although still considered by the NBS as an indicator representing steady and rapid growth – appears to be lower than the medium estimate of 9.3 percent by Bloomberg and 9.2 percent by Reuters.

The deceleration in foreign demand, largely caused by the lingering financial crisis in the West, has contributed to China’s economic slowdown. The world’s largest exporter has seen its trade surplus in September decrease by 12.4 percent from a year earlier to US$14.5 billion, and has seen its shipment growth to its largest export market Europe more than halved from 22 percent to 9.8 percent.

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