China is settling at the new normal

Latest GDP data from China indicate the Middle Kingdom’s economy is not undergoing neither a crash or a rejuvenation. For the first quarter of the current year, the Chinese economy registered a growth rate of 6.7% that almost lies between the government’s target of 6. 5 to 7%.  

Interestingly, trade has got momentum s both exports and imports registered an upward trend. China is a natural export oriented economy and energy in trade sector indicate that the its manufacturing sector and the economy as a whole is not going to register further slowdown.

 Few months back the Chinese officials have administered a mild devaluation of their currency and it seems that rewarded with export growth.

Inside the data, economist trace out that in few sectors like real estate which are critical as beginners of economic momentum, investment have gone up. But this is visible in few destinations only. The recovery of the financial markets is not yet over. Given this conditions, economist rule out growth picking up to 7% which is the target growth the emerging market neighbor – India.

The new trend in growth is a remarkable sign of stabilization. According to the policy makers with the Chinese Communist Party, the economy is trying to settle at around 6.5%, which they describe as a new normal.

China’s stabilization at this growth will have only neutral effect on the world economy. The reason is that financial markets and investment have already adjusted to the now slow growth. At the same time, absence of an indication about too slow growth is a relief. China’s further slow sown could have reduced exports and growth performance of a large number of developing economies who supplies raw material and energy to China.