China to decelerate in coming months

Chinese economic growth may moderate further in the coming months due to weak exports.

The Conference Board, the leading economic index for China, said that its leading indicator for Chinese economy rose 20 basis points month-on-month to 154.5 in April, slower than a 90 basis points increase in March.

Conference Board economist Bill Adams said that the indicator’s recent slower trend is consistent with more moderate growth in economic activity in coming months. Cooler economic conditions in the U.S. and Europe have also contributed to weaker conditions for the export sector since the beginning of the year.

The index has increased modestly in the early months of 2011, supported by expansion in credit and construction activity, despite weakness in consumer expectations and production indicators, Adams said.

The coincident economic index, which measures current economic activity, increased 1.3% in April to 201.8, at the same pace as in the previous month.

Preliminary figures show that China’s economy grew 9.7% in the first quarter from a year earlier after a 9.8% expansion in the fourth quarter.

The International Monetary Fund forecasts that China will grow by 9.5% each in 2011 and 2012, while the Organization for Economic Co-operation and Development sees a 9% growth for the economy this year.

Chinese policymakers are caught between rising inflation and signs of slowdown in growth. Official data released earlier this week showed that inflation climbed to a 34-month high of 5.5% in May from 5.3% in April.

A separate survey of Chinese bankers found that 65.5% now expect policy to tighten in the coming quarter compared. The central bank has raised interest rates four times since October 2010.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.