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world growth

Wednesday, August 6, 2008

China's booming economy shows signs of weakening

China's economy has been negatively impacted by the worsen state of the world economy. Hopefully, things will improve as the price of oil drops.

China's booming economy shows signs of weakening

China's economic boom, a bright spot amid global gloom, shows signs of weakening
August 06, 2008

http://money.cnn.com/news/newsfeeds/articles/apwire/83521c08fe1ee4a00878acbf3a638250.htm

NEW YORK (Associated Press) - Changshu Zhongjiang Import-Export Co., a clothing exporter in Suzhou, west of Shanghai, is accustomed to double-digit annual revenue growth. This year, with its key U.S. export market limping, sales have fallen an alarming 10 percent.

Changshu, with 580 employees, has avoided layoffs but profits will be down as much as 85 percent from their 2005 peak, said Xue Jianfang, the company's vice president.

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Textile exports fell 4.2 percent in June from the same month last year, a serious blow to an industry that employs millions of people. Overall export growth in June was 18.2 percent, down from May's 28 percent rate.

Two weeks ago, the Communist Party's ruling Politburo issued an economic plan that switched its stance from just taming prices to a dual mission of "ensuring stable and fast growth and preventing inflation."

Last week, in a first step to help individual industries, the government raised rebates of value-added taxes on textile exports by 2 percentage points to 13 percent. That reversed a decision last year to cut such rebates in hopes of narrowing China's swollen trade surplus and reducing a flood of export revenues that is adding to pressure for prices to rise.

On Wednesday, the government extended support to small businesses by boosting lending limits for local banks by 10 percent.

Also this month, auto consulting company J.D. Power and Associates cut its forecast of China's 2008 auto sales from 6.2 million units to 5.95 million. It said higher gasoline prices were prompting drivers to delay car purchases. That would be a blow to global automakers that are counting on China's fast-growing market to drive sales at a time of slumping demand in the United States and Europe.

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