China’s Economy Still on Blistering Pace

The Shanghai stock market index slumped badly these days. Although the economy seems cooler now, the inflation is still high. The government has heavy pressure on macro-economy adjustment. From Los Angeles Times:

China’s economy kept growing at a sizzling pace in the first quarter, but the nation’s inflation rate also remained high, at above 8%, the government said Wednesday. The trends prompted officials to raise banks’ reserve requirements for the third time this year to slow lending.

The government said China’s gross domestic product, or total output of goods and services, expanded 10.6% in the January-to-March period compared with a year earlier. Although that was slightly slower than the 11.9% pace for all of 2007, analysts had expected a sharper decline because of weakening exports and severe snowstorms that disrupted production and travel this winter.

Financial Times has a story on China’s stock market slump:

Shares in Shanghai have plunged as sharply in the past six months as they surged during the first part of 2007. The Shanghai composite index closed on Wednesday at 3,291 – down 46.3 per cent from its all-time high of 6,124 on October 16.

Shares on the bigger of mainland China’s two stock markets (the other is Shenzhen) are now worth pretty much the same as in early April last year. Shanghai was the best performer among in Asia’s big exchanges in 2007. It is now very much a bear market.


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