China's Red Dragon slowdown puts growth target in jeopardy

Red Dragon economy is heading for slowest advance in over two decades

China’s Red Dragon economy was on course for its slowest advance in more than two decades today as exports faltered and politicians get to grips with a credit boom.

The world’s second biggest economy suffered a second quarter in a row of slowing growth — down from 7.7 per cent to 7.5 per cent — between April and June. The powerhouse is also in danger of missing Beijing’s official 7.5 per cent growth target for the overall year amid warnings that growth will slow further in the second half of 2013, leaving China facing its weakest growth for 23 years.

A Chinese slowdown also has implications for Britain, which runs a huge £21 billion annual trade gap with the nation but has worked to grow its exports to China since the financial crisis five years ago.

China’s growth has now slowed for nine of the last 10 quarters. ING Bank economist Rob Carnell said: “There are question-marks for the Chinese authorities over whether they have any kind of wriggle room for more stimulus given sticky inflation and a property boom. This is something we are going to have to get used to: China not having the global pulling power that it once did.”

President Xi Jinping, left, is attempting to shift China’s economy away from its rapid investment- and export-driven growth and has taken a hard line to rein in exuberant lending, sending interbank lending rates soaring last month and pushing up loan costs. Experts said this would cause a deeper slowdown in the second half of the year.

Exports meanwhile suffered a shocking collapse in June, down 3.1 per cent year on year, while China’s manufacturing machine also faltered last month with slowing growth. The IMF cut its annual growth forecast for China last week and its chief economist, Olivier Blanchard, said the country was at the greatest risk of a “large decrease in growth”.

Société Générale’s economist Wei Yao said: “The new leaders’ tough love stance will not be easily swayed, at least not by this latest set of data. We continue to see limited chance of any significant monetary easing or infrastructure stimulus from Beijing in the near term, and so economic growth is expected to step down further.”

Shares in London rose today as the quarterly figure of 7.5 per cent was in line with City expectations.

China’s finance minister Lou Jiwei appeared to try to lower expectations last week when he told reporters in Washington that growth as low as 6.5 per cent this year would be “tolerable”.

CMC Markets analyst Michael Hewson said: “The markets are higher, but on relief more than anything else, given the finance minister’s comments. There’s been more than a touch of expectations management around these figures.”

Start your day with The Independent, sign up for daily news emails
Voices
Barn owls are among species that could be affected
charity appeal
News
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Sport
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas