China warns of weak int'l demand as global economy slows

Beijing—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 and author of the report, 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 U.S. 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 4.0 percent in 2006.
If the U.S. economy weakened, U.S. demand would fall. Regions with close links to the U.S., such as the European Union and East Asia, would immediately feel an impact, the researcher said.
The U.S. remained China's second largest export destination, ministry statistics show. China's exports to the U.S. 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 U.S. accounted for 19.4 percent of China's total, closely behind those to the European Union. According to China's central bank, when U.S. economic growth slows by one percentage point, China's exports decline by six percentage points. Further, U.S. 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.—Xinhua