Economic Trend News
- China not immune to global slowdown, warns UN
Date: 11-Jan-2007 Sources: (Xinhua Online)
The Chinese economy is not immune to a slowdown in the global economy, even more so if such a slowdown is dragged by the U.S. economy, warned a UN report on Wednesday.
According to the UN World Economic Situation and Prospects 2007,released on Wednesday, China is expected to grow at a robust pace of 9 percent in 2007, only a slight moderation from the 10.5 percent growth rate estimated for 2006.
China's exports have grown at a pace of more than 20 percent per year since its accession to the WTO five years ago. Should this trend continue, China would become the largest exporting economy in the world by 2009.
However, this spectacular export growth is largely based on further processing of imported intermediate goods, the UN report noted. About 60 percent of China's exports can be categorized as such 'processing trade' with slim value-added margins.
As also the United States is a key export market for China, this trade structure makes the Chinese economy vulnerable to a U.S.-led global slowdown.
The report also considered a more pessimistic scenario, however, under which house prices in the United States would make a more significant dive and push U.S. economic growth below 1 percent in 2007.
Should this happen, then economic growth in China would drop to a much lower 5 percent in 2007, it added.
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