CHINA: FLYING OR LANDING?

CHINA’S ECONOMY STILL FLYING HIGH: MARK MOBIUS

Jean Chua

CNBC, August 21, 2012

China’s economy has slowed for six consecutive quarters and exports growth is almost stagnant, but the world’s second-largest economy is still “flying” high compared to advanced economies like the United States and Europe and will do very well over the long term, said Mark Mobius, Executive Chairman at Templeton Emerging Markets Group.

Exports, while slowing, are “not disappearing,” Mobius said in an interview with CNBC on Tuesday. “They are still very, very big and I am quite optimistic China will continue to power ahead,” he added.

Mobius says a very pessimistic view would put China’s GDP growth at 5 percent for the current year, which is still “five times more than the U.S.”

“They are not landing, they are continuing to fly and chances are growth would be better than that. It'd be more like 7 percent,” he said.

Faltering demand from China’s two biggest customers – the European Union and U.S. – caused Chinese exports to post just one percent growth in July from a year earlier, the poorest showing since January, when exports fell. A Reuters poll had expected exports to grow 8.6 percent in July.

The 7.6 percent expansion of the economy posted in the second quarter was also the weakest in three years, prompting some economists to say that the country is already in a “hard landing.”

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