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BIZCHINA / News
Economy could be stabilizing
By Xin Zhiming (China Daily)
Updated: 2007-08-02 08:46
The National Bureau of Statistics index of purchasing managers in July
shows the economy may stabilize in the coming months after blistering
growth in the first six months, analysts said.
The index, which was compiled by the China Federation of Logistics and
Purchasing on behalf of the bureau and released yesterday, fell to 53.3
last month from 54.5 in June. A reading of over 50 indicates an expansion
in business activity.
It has fallen for the fourth consecutive month and the July figure was a
five-month low.
"It shows decreased orders for the coming months," said Zhu Baoliang, an
economist from the State Information Center. "This is not surprising as
the country has taken measures to cool the economy, which will lead to
decreased exports in July and August," he told China Daily.
China's gross domestic product grew by 11.5 percent and CPI growth hit a
33-month high of 4.4 percent in June, with fixed-assets investment and
lending also hovering at high levels, triggering widespread concerns
about an overheating economy.
The country has started to reduce or remove the export rebate of more
than 2,800 products from July 1 in its efforts to dampen exports and
narrow trade surplus.
The new export orders index by the statistics bureau fell to 53.5 in July
from 55 in June.
"Exporters have rushed to beat the tax rebate adjustment before July 1
and therefore the orders would drop in the coming months," Zhu said.
The index would continue to drop but in a gradual manner this year, he
said.
A similar purchasing managers' index for China's manufacturing sector,
which was released by the Hong Kong-based CLSA, a brokerage and
investment banking arm of French bank Credit Agricole, also dropped to
53.2 in July from a 27-month high of 55 in June. The fall is due to
decreased new orders, particularly for exports, according to the survey's
compiler.
Zhu said more than half of China's industrial products are for exports
and reduced exports have led to the falling index.
Given the red-hot economic growth in the first half of this year, Zhu
forecast that the interest rates may be raised again within this year.
As a result of the tightening measures, China's exports would slow down
and imports pick up in the second half of this year, according to
research by Zhu's team. "Export growth may slow down to about 25 percent
and imports rise to around 20 percent," Zhu said.
(For more biz stories, please visit Industry Updates)
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