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ECONOMY
Weekly Watch> WEEKLY WATCH NO. 22, 2010> ECONOMY
UPDATED: May 31, 2010 NO. 22 JUNE 3, 2010
Moderate Prospects
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Investment and consumption have been the biggest motors of the economy, both surging in the first four months this year. Exports also regained some lost ground, soaring 30.5 percent in April from a year ago.

But clouds have been gathering over the prospects of Chinese exporters, said Ha Jiming, chief economist with the Beijing-based China International Capital Corp. Ltd.

The pain of the Greek sovereign debt crisis is spreading throughout Europe, which accounts for 16 percent of China's exports. Worse still, the euro has depreciated nearly 15 percent against the yuan, the Chinese currency, making Chinese goods even less competitive in Europe, said Yao Jian, spokesman of the Ministry of Commerce.

House prices largely held onto peak levels, but sales volumes are falling in many cities as a string of tough government measures gain traction. This is expected to pour cold water on property developers' enthusiasm for new projects, draining steam out of investments growth, said Wang Tao, chief economist at UBS China.

After a powerful rebound, the Chinese economy is likely to see a mild slowdown in the second half of this year due to withering exports and a lackluster property market, said Wang.

China will carefully time its exit from stimulus policies to avert a second dip in the economy, said Zhou Xiaochuan, Governor of the People's Bank of China, at the central bank on May 25.



 
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