In its latest economic outlook, China's Ministry of Commerce
warned of a possible slide in international demand with an
anticipated global slowdown.
Sheng Baofu, a senior researcher with the ministry, said the
next stage of China's economic growth would be tied to
international demand. Sheng said the government should develop
flexible macroeconomic policies to respond to the uncertainty of
global trends.
The report said the world economy would slow due to the dimming
outlook for the United States economy, which would cause a sharp
decline in China's exports.
In mid-2007, the United Nations forecast that the growth of
world gross product would slow to 3.4 percent for 2007 as a whole,
from four percent in 2006.
Regional impact
If the US economy weakened, US demand would fall. Regions with
close links to the US, such as the European Union and East Asia,
would immediately feel an impact, the researcher said.
The US remains China's second-largest export destination,
ministry statistics show. China's exports to the US in the first
quarter of 2007 rose 20.4 percent year on year. However, export
growth slowed to 15.6 percent in the second quarter and even
further to 12.4 percent in the third quarter, according to the
ministry's statistics.
In the first three quarters of the year, exports to the US
accounted for 19.4 percent of China's total, closely behind those
to the European Union. According to China's central bank, when US
economic growth slows by one percentage point, China's exports
decline by six percentage points.
Further, US and Chinese interest rates are moving in opposite
directions, which could cause disruptions in China's financial
markets and offset the Chinese government's efforts to rein in
inflation, the report said.
Consumption growth remained sluggish in the first ten months of
the year and failed to drive economic growth, said the report.
(Xinhua News Agency November 17, 2007)
