Seeking Alpha

Jim Trippon's  Instablog

Jim Trippon
Send Message
Jim Trippon is an Amazon.com bestselling business and finance author, a practicing CPA, and a fee based investment advisor. His portfolio of companies includes J.M. Trippon & Company CPA, Trippon Wealth Management & Trippon Financial Publishing. Jim has dedicated his business career to... More
My company:
Trippon Financial Research, Inc.
My blog:
Global Profit$ Alert
My book:
Stay Rich Forever: Retirement Planning Secrets of Millionaires and How They Can Work For You!
  • Will China Steer A Soft Landing? 0 comments
    Nov 2, 2011 9:54 AM | about stocks: SCGLY
    With China's GDP slowing unexpectedly according to recent figures, some observers are wondering if its usually red hot economy may now be headed for a hard landing or not. China's National Bureau of Statistics released data that showed China's GDP grew 9.1 percent year over year for its third quarter, less than the 9.3 percent median figure predicted in a Bloomberg News survey. The GDP had expanded 9.5 percent in the second quarter while GDP growth was 9.7 in percent in the first quarter of this year.

    China GDP Growth

    china stocks,chinese economy,chinese stocks,china economy,china stock,china stock digest,global profits alert,jim trippon

    While the slower growth was the goal of China's government, according to Lian Ping, chief economist with the Bank of Communications, cited in a China Daily article, now the concern in some quarters is if growth is slowing too much. The government has been trying to hold down inflation mostly by interest rate hikes to slow the rise in surging property prices. China has raised its benchmark rates on one-year borrowing costs to 6.56 percent in an attempt to drive inflation down to 4 percent. The inflation rate has fallen, but prices still climbed 6.1 percent in September, exceeding the target rate of 4 percent.

    Euro Demand Down

    Although China is still battling inflation, it may at least be temporarily done with rate hikes. The falling demand in Europe due to the debt crisis is weakening that major market for Chinese exports. China's internal spending has supported its domestic growth even as the global economy continues to show signs of slowing. Consumer spending has been more robust, with a 17.7 percent gain in September following a similar gain in August. Inflation has had a different effect on China's populace than it would in the west, particularly in the US. With a greater savings rate, inflation has meant more money for both investing and spending, so thus the healthy growth in consumer spending.

    Although China is still an export driven and trade dependent economy, with 27 percent of its GDP accounted for by exports in 2010, many observers see China's growing consumer economy as eventually changing the mix. China's fixed asset investments, those for property, plants and equipment, was up 24.9 percent in the first three-quarters of the year. Investment in real property is still running high, with a 32 percent year over year increase, while investment in residential property was up 35 percent. Industrial value added output, a key mark of industrial production, rose 14.2 percent in the first three quarters of the year.

    Growth Still There

    Despite the slowing of Europe's economy and the global economy as well, China's growth, while slower, is still substantial. Anything near the 9 percent annual figure still dwarfs the growth rates of the mature economies in the west. Still, the world's financial markets have been used to continued rising growth in China, so the markets reacted. The Shanghai composite index dropped 2.3 percent on the news of China's slower growth while other Asian markets followed suit. Near and medium term there are still many factors to consider as to how China's economic growth situation will play out. There is debate about how much growth China will continue to enjoy as well as debate about how China's government will react to those results as well as to changing economic conditions.

    Construction In Wuhan, Hubei Province

    china stocks,chinese economy,chinese stocks,china economy,china stock,china stock digest,global profits alert,jim trippon

    While we've seen estimates for GDP growth going forward in China ranging from 8.5 percent to around 9 percent, the question is how will the country respond? Yao Wei, economist at Societe General SA (OTC: SCGLY), said in a Bloomberg piece that the next move might be easing, though not in the near term. On the other hand, Shanghai Securities' strategist Tu Jun said that China's central bank was likely to keep to a tight monetary policy, with interest rate hikes resuming by the middle of next year. China central bank advisor Xia Bin said the economy doesn't need any major stimulus, and that the central bank should stick with a policy he calls, "prudent."

    What's Likely To Happen

    China most likely will keep a close rein on things, though it has to watch carefully, as there are both inflationary aspects and areas of its economy that may need a boost. There is still concern with the property situation with its potential for further inflation, though the government has been encouraging behind the scenes increases in loan reserves by the banks. The consumer spending will also help buoy growth in what looks to be the absence of dramatic trade growth for now. Small and medium enterprises are going to need easier credit and the government is trying to move in that direction. Of course if the European situation deteriorates to the point of more severely clouding global growth, China's landing could be harder. But the PRC has plenty of reserves to fight off a downturn, so it's likely to get the stable growth it's after.


    Click HERE to know more about the China Stock Digest: China Stock Market Research & China Stock Analysis
    How to Score Big on the World's Second Largest Economy...
    China surpassed Japan as the world's second largest economy, right behind the U.S. as the strongest on the planet.
    Chinese companies are making money hand over fist, and will continue to do so for years into the future.
    For now, the Chinese stock markets are taking a break from their recent torrid pace.
    That won't last much longer.
    It's time to position your portfolio for potential monster gains the likes of which you've never seen before.
    Click HERE for the exciting details on how to score big in the Chinese stock markets from the "Sage of Shanghai"...

    For more information and archived issues, visit http://www.globalprofitsalert.com

    Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Todd Shriber, Kelley Damiani and J. Daryl Thompson.

    Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph:

    This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com.
Back To Jim Trippon's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.