Slower Chinese growth

The latest economic growth figures in China show a slowing economy, continuing to grow but at its slowest pace in three years.

Falling levels of state investment combined with lower demand from key export markets have both contributed to this slowdown.

In the second quarter of this year, gross domestic product in China grew by 7.6%. It was up 8.1% in the first quarter.

China recently revised its economic growth target for 2012 down to 7.5%.

With China representing around 20% of the total global economic output, these figures are an important indicator of how the global economy is doing. China is the biggest exporter in the world.

What economists are still trying to decide is whether an economic slowdown in China will represent a ‘hard’ or ‘soft’ landing.

China does at least have more resources and tools at its disposal to counter any economic slowdown, as they do not share the same levels of indebtedness as many developed Western economies.

We always take Chinese economic growth figures with a healthy pinch of salt, as it is difficult to know how engineered or impartial the figures we see published by the Chinese authorities might be.

A similar challenge faces those choosing to invest in Chinese companies; getting hold of verifiable information on which to base a reliable valuation model.

Photo credit: Flickr/Dainis Matisons