kneejerk coming, page-25

This article explains that China will have a slower GDP growth not a recession :)





China 2008 GDP growth seen slowing to 10.4 pct; CPI at 3.8 pct - Deutsche Bank
Mon, Jan 21 2008, 11:49 GMT
http://www.afxnews.com



BEIJING (XFN-ASIA) - China's GDP growth is likely to fall to 10.4 pct this year from an estimated 11.5 pct in 2007, largely due an expected slowdown in exports, said Jun Ma, Deutsche Bank's chief economist for Greater China.


"Our forecast of a modest deceleration of GDP growth is largely due to a slowdown in exports. However, domestic consumption is likely to be very resilient," he said.


Even if the US economy does not register any growth this year, China will still achieve over 9 pct economic expansion, Ma said.


"We are positive on corporate profitability and continued investment momentum," he said, adding that investment growth is seen sustaining at 25 pct for at least the first half of the year.


Deutsche Bank believes China's export sector will see a visible deceleration this year, with merchandise exports growth seen slowing to around 18 pct from 26 pct in 2007.


Ma expects fixed asset investments growth in China this year to be at 23 pct, compared with 25 pct in 2007.


He also said that consumer price inflation is likely to "fall visibly to an average of 3.8 pct this year."


But inflation in January is likely to be at around 7 pct, he said.


Meanwhile, retail sales are expected to rise 16.5 pct in 2008.


Ma said that China banks' loans growth this year will most likely be at 15 pct.


On the monetary front, Deutsche Bank sees pressure for rate hikes easing in 2008 due to the expected drop in inflation, although the yuan's appreciation could accelerate a bit due to EU pressure.


It expects fewer rate hikes this year, saying only two more increases are likely in the first half of 2008.


Deutsche Bank expects the yuan to appreciate 6-7 pct against the US dollar this year.


http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=85cedf28-0a85-47c1-961e-fb2737a5ce99