Jun Ma is one of the more accurate economic forecasters following China (he’s a at Deutsche Bank in Hong Kong). His latest monthly missive states flatly that the inflation scare in China is over, and that he’s now worried about a significant slow down in growth. He’s marked down his 2008 growth forecast from 10.8 per cent to 10.2, and next year’s from from a 9.7 per cent increase to 9.2. Though in the developed world that sounds like a world beating performance, this is China we’re talking about, and there hasn’t been a sub 10 per cent annual growth performance in years. The culprits according to Ma are sharply slowing export growth (a combination of weak growth in the rest of the world as well as a stronger RMB) plus a slump in the property market, plus the negative wealth effect associated with a savagely lower stock market. This bit in Jun’s report particularly caught my eye:
“A large number of property developers are under pressure to liquidate their projects or completed units at distressed prices due to very tight credit policy as well as a sharp decline in demand. Year on year property sales growth (in terms of floor space) was down 7% in January to May period, the first decline since 1997.”
Boy should that ever sound familiar to any American readers…