Soft Landing for China?

by Laura Ehrenberg-Chesler on July 13, 2012

in Foreign Markets

This morning China reported GDP growth of 7.6%.  This number reflects slowing growth, though an enviable number for many other countries, some of which are experiencing no growth or contraction in their GDP.

In our blog posts over the past year or so, we have addressed the possibility that China has actually done a good job engineering their own slowdown, by raising rates in order to slow the bubble that was forming in the real estate market.

CAT’s CEO did acknowledge the longer-term slowdown in China’s rate of growth from 10%-15% to a more sustainable 7%-10% growth rate.  He also allowed that China has done a remarkably good job of taming a very high rate of inflation, and a potential real estate bubble, by raising interest rates, and raising the down payment requirements for individuals buying second or third casino online/a> homes.

Many U.S. companies have a stake in seeing China prosper and grow, but that growth must be managed with an eye toward sustainability, not short term goals.  According to Douglas Oberhelman, the CEO of Caterpillar, China is doing a very commendable job in ensuring this outcome.

They are now reversing that policy, as well as several others, in order to stimulate growth, and the expectation is that growth will re-accelerate in the second half of the year.

Having implemented policies early as they saw their various asset classes inflating, and reacting quickly as the global economy has turned down, China may have done a remarkable job setting themselves up for a soft landing.

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