One group watching international economy drivers says it already sees worrying signs in China’s economy.
Coface, a large credit insurer, is forecasting China’s growth will slip to 8.8 percent this year after 10.3 percent growth last year.
The company said it is seeing the impact in changing financial actions in the supply chain. Coface said 88 percent of Chinese companies are buying parts and materials on credit this year, up 23 percent over the past two years.
Chinese “companies are undergoing a series of negative impacts: the withdrawal of the budgetary stimulus, scarcer and more expensive credit, acceleration in the yuan’s appreciation, inflation and the increase in supply costs, and, above all, the intense pressure to increase salaries,” said Constance Boublil, Coface’s economist specializing in Asia. “If in the medium-term, these impacts are welcome as they are favorable to Chinese growth in favor of consumption, in the short term, the most fragile companies could be in difficulty.”
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