China slowdown is bad news for Europe
13.04.12 @ 19:26
BRUSSELS - China's economy so far this year grew slower than ever in the last three years, spelling bad news for its biggest trading partner, the European Union.
The second-biggest economy in the world grew by a mere 8.1 percent on a one-year-basis during the first quarter of 2012, the country's national statistics bureau announced on Friday (13 April), down from 8.9 percent during the last quarter of 2011 and "significantly lower than expected," Maarten-Jan Bakkum, emerging market analyst at ING, told EUobserver.
Faced with a fragile global recovery and hesitant demand, China's famously export-driven economy has been abating for several years now. Early last month, the country's leadership lowered its 2012 growth target to 7.5 percent, down from 8 percent last year.
The new numbers, however disappointing, are still high and relatively stable. By comparison, the EU's economy grew by only 1.5 percent last year and is expected not to grind to a halt this year, while the eurozone is already in recession.
For the long term, then, these figures may not be of much significance. China is widely believed to remain a strong driver of global economic growth as its billion-strong population begins to buy products on the world market.
"We believe the economy will continue to maintain a moderately steady growth in the future," Sheng Laiyun, a spokesman for the national statistics bureau, told state press agency Xinhua.
But for the short term, experts say, the numbers are bad news for Europe, whose economy is closely interlinked with that of China. They not only confirm Europe's own fragile recovery as it imports less from China, but also indicate a future withering demand for European products.
"The news is very relevant for Europe," says Bakkum. "The little amount of good news coming from Europe comes from Germany, which is highly dependent on the export to China."
Europe's main export product group are machinery and transport equipment. "All factories in China are filled with European equipment," says Bakkum. A slump in production in China, then, would result in a slump in demand from Europe.
The European Commission, for its part, refused to comment. "We don't comment every time there is a new statistic," Olivier Bailly, a commission spokesman, told reporters in Brussels.