China to see limited impact from US slump: World Bank

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Monday , May 12, 2008 at 2234 hrs China will see only a “limited’’ impact from the slowdown in the US, the world’s biggest economy, as most goods it sells there are labor-intensive items needed for daily use, said the World Bank’s Chief Economist Justin Lin. “Chinese exports to the US will remain strong and won’t see negative growth’’ this year and next, Lin told an investment forum in Beijing on Sunday. The US is China’s biggest trading partner after the EU.

China aims to slow export growth to curb a trade surplus that has helped pump excess cash into its banking system, threatening to overheat the world’s fastest-growing major economy. Total US imports plunged the most in six years in March as purchases of furniture, cars and telecommunications gear fell, reflecting the weakest growth since 2001 and a falling dollar. Premier Wen Jiabao is balancing efforts to curb inflation near an 11-year high against the risk of an economic slump as overseas demand for Chinese goods weakens. China’s export growth slowed to 22% in April after gaining 31% in March, according to figures derived from Ministry of Commerce data.

April’s trade surplus was about $16.8 billion, according to Ministry of Commerce data. China must save less and boost consumption to narrow the trade surplus, People’s Bank of China Governor Zhou Xiaochuan told a forum in Shanghai yesterday. Zhou raised interest rates six times in 2007 and ordered banks to set aside larger reserves this year to curb loan growth that helped fuel inflation.

Consumer prices rose 8.2% in April from a year earlier, according to the median estimate of 22 economists in a Bloomberg News survey, after gaining 8.3% in March. The world’s fourth-largest economy expanded 10.6% in the first three months of 2008 from a year earlier, the ninth straight quarter of growth of more than 10%.