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Soft landing seen for China's economy
(Reuters)
Updated: 2005-08-03 06:24
BEIJING (Reuters) - Steel price cuts, slower growth in oil demand and a
survey showing that raw material shortages are easing provided new evidence
Tuesday of a slowdown in China's breakneck economic growth.
In a move that analysts blamed on oversupply, state media said Wuhan Iron and
Steel Co. Ltd., the listed arm of China's third-largest steel maker, would cut
some product prices in September for the second time in less than two months.
The latest cuts, in an increasingly oversupplied market, were meant to bring
domestic prices in line with global rates, the official Shanghai Securities News
said.
"The Chinese economy has started to slow due to excess capacity. The rapid
investment-led boom of the last five years has borrowed growth from the future,"
Andy Xie, chief Asian economist at Morgan Stanley, said in a note to clients.
The next stage of the slowdown, which could last two years, would involve the
liquidation of surplus property developed in anticipation of speculative demand
that had now dried up, Xie said.
There would also be further commodity price declines as investments in new
steel mills, container ports and the like were scaled back, he said.
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