Citigroup’s senior China economist has cut his growth forecast for the world’s second largest economy below the governments’ official target of 7.5 per cent, and adds the economy of Australia’s biggest trading partner will slow further next year.
Shuang Ding, who worked at the People's Bank of China and the International Monetary Fund, says in 2013 the Chinese economy will grow at 7.4 per cent and at 7.1 per cent in 2014.
“The recent liquidity crunch in the interbank market suggests monetary and credit conditions will be less accommodative in the second half” of this year, says Ding.
If the Chinese economy does slow to rates Ding predicts, the price Australia can get for its iron ore in China as well as domestic business confidence may suffer. The spot price for iron ore imported through the northeast Chinese port of Tianjin fell US cents 68, or 0.6 per cent, to $US120.24 yesterday. Since its high this year on February 8, of $US157.30, the Tianjin iron ore spot price has fallen 24 per cent.
National Australia Bank’s survey of more than 400 businesses last month shows that a gauge of business conditions – which includes hiring, sales and profits – slumped to minus eight, a four-year low.