Chinese economy slowest for 17 months

A slowdown in Chinese manufacturing in July is reflected  in its slowest growth for 17 months, hard on the heels of Chinese claims to have overtaken Japan as the world's second biggest economy. Government measures to crack down on property speculation and close energy inefficient businesses to meet climate change objectives were cited as a major factor for the cooling down.
 
Economists had been anticipating a weakening in the key barometer, the Purchasing Managers' Index but the fall from 52.1 in June to 51.2 – anything over 50 shows expansion – was greater than forecast in a Bloomberg poll. Out of 11 measures only employment showed an improvement.
 
Despite the slip, full year growth could still reach 9.5pc compared to 9.1pc last year according to State Council researchers. Morgan Stanley <http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7903439/Morgan-Stanley-returns-to-profit.html>  economist Wang Qing said the slowdown seemed to be concentrated in heavy industry, one of the key targets in China's energy efficiency drive but added that the index "does not necessarily reflect weakening in the underlying economic fundamentals."

Exports from South Korea were up for the ninth month in a row, rising by almost 30pc compared with the same period last year. Imports, including raw materials, rose nearly 29pc to leave South Korea with a trade surplus of $5.7bn (£3.6bn).
 
In the second quarter the economy grew by a faster-than-expected 1.5pc as the weakness of the won provided an export incentive.
 
August 2nd 2010