China

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CHINA February 2012 EDC ECONOMICS MARKET SPOTLIGHT: Real GDP grew 9.2% in 2011, a marked slowdown from the 10.4% pace of 2010. A sharp slowdown in real estate construction activity, as a result of past excesses, and weak demand from Europe will result in growth slowing to 8.0% in 2012, with the slowdown occurring in the first half. However, inflationary pressures are abating rapidly, giving room to ease if necessary. The key downside risk to the outlook is the impact of the real estate slowdown on the financial sector and local authorities’ fiscal position, both of which should be contained. Economic Credit Agencies Moody’s: Aa3 S&P: AAFitch: A+ Nominal GDP (2010) USD 5,878 bn Population (2010) 1,341.4 millions Total Trade / GDP…show more content…
Outlook: EDC Economics expects growth in China to moderate to 8.0% in 2012 from 9.1% in 2011 with a marked slowdown in real estate construction activity in the first half of the year and weaker demand from Europe. Nonetheless, the slowdown is expected to be relatively short-lived with authorities loosening monetary policy, leading to a resumption of credit flows and economic activity in the second half and 2013. Economic & Political Intelligence Centre EPIC@edc.ca Economic Indicators 06-10 avg. GDP (% growth, real) Inflation (%) Fiscal Balance (% of GDP) Export growth (%) Import growth (%) Current Account (% of GDP) Reserves (month of imports) External Debt (% of GDP) Debt Service ratio Currency (end of period) Sources: EIU, EDC Economics 10.4 3.2 -1.6 31.3 38.6 5.2 22.7 8.9 1.8 6.6 2011 9.1 5.7 -1.6 20.5 26.6 3.9 20.9 9.1 1.7 6.3 2012 8.0 2.8 -1.1 9.6 11.7 3.0 20.3 8.6 1.8 6.0 2013 8.9 3.5 -0.5 11.9 13.1 2.5 19.2 8.2 1.9 5.7 20 50 40 30 70 60 PMI - Domestic Demand Outperforms Exports Sep/06 Sep/07 Sep/08 Output Sep/09 Sep/10 Sep/11 Export Orders Source : EIU – Haver Analytics CHINA February 2012 EDC ECONOMICS General Political Environment: China is a one-party state with the Chinese Communist Party (CCP) controlling the government. The nine-person Politburo

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