MARKETS

Beijing under pressure to curb growth slowdown

THE continuing slowdown in China’s economic growth could result in new stimulus measures as Beijing attempts to rally support ahead of this year’s Communist Party power transition.

Justin Niessner
Beijing under pressure to curb growth slowdown

With growth in world’s second largest economy threatening to fall to its lowest point in more than 20 years, economic boosters from the government are predicted to coincide with the once-a-decade shift in political leadership.

“Politicians want a benign backdrop for their part congress gathering and slumping stock prices and a worsening growth slowdown could spoil the party,” Bank of America chief China economist Lu Ting said it a recent Bloomberg report.

“Putting together the economic fundamentals and the timing of major political events, there will be a second round of policy easing, including cuts to banks’ reserve requirements and some fiscal stimulus.”

China’s commerce minister Chen Deming said specifics would be announced soon and promised a better situation for Chinese foreign trade in the fourth quarter of the year.

The urgency for such measures follows official data which shows only an 8.9% increase in production last August compared to the same month last year.

The overall economy expanded only 7.6% during the June quarter compared to a year earlier – the lowest growth rate in three years and the sixth straight period of growth slowdown.

A 2% increase in inflation last month, surplus industrial capacity and higher risk in bank loans have been cited as pressuring factors on growth rates.

Oversupply of coal at China’s major ports in recent months has raised stockpiles, softened prices and caused consumers to default on their contracts as traders scramble to north Asian customers.

The coal pile at the world’s largest coal loading port, Qinhuangdao, reached almost nine million tonnes in the June quarter.

The 10Mt-capacity Qinhuangdao accounts for half of China’s coal needs and functions as a clear barometer of the state of the domestic market.

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