China slows; world worries

When manufacturing growth slows in the second largest economy of the world, there are quite a few reasons for the world to get worried about.
Firstly, slowing manufacturing demand in China is a stark reminder of tardy global growth. With the eurozones economic woes riding high, slowing external demand for Chinese factories doesn come as much of a surprise. However, combined with news that the US economy may be slowing again, ebbing factory activity in China does reflect that all is still not hunky-dory for global economic recovery.
"The strength of manufacturing in China is considered a barometer of the global economy because of the nations role as a powerhouse exporter," said an article in CNN Money, CNNs exclusive business site. Secondly, concerns of the world aside, Chinas own domestic issues are also brought to the forefront, especially regarding its slower growth compared to the tall standards China had previously set for itself. The World Bank scaled back its forecast for Chinas 2013 GDP growth by 0.1 percentage point to 8.3 percent, while the 1Q2013s annual GDP growth rate at 7.7 percent from 7.9 percent in the previous quarter was also disappointing.
"After 30 years of high-speed economic growth, potential productivity in China has dropped," one columnist commented in the Financial Times on Chinas slow growth in the first quarter this year. For countries exporting to China, the recent oriental growth numbers are no bearers of good news. Countries such as Australia, Indonesia, and those in Latin America and Africa will likely be affected as their commodity exports dwindle.
In fact, Chinas is also Pakistans second largest export market in terms of value, and made up about nine percent of Pakistans exports in FY12. While exports to China have been on an upward trajectory for the past few years, Chinas slowing growth should be a cause for concern for local exporters. China is a strong market for cotton, seafood, leather products and metal ores from Pakistan.
Slowdown in the Chinese economy had already started manifesting signs of distress amongst Indonesian farmers later in 2012. In August last year, an article in these columns talked about local seafood traders worried about declining trade with China. Theres not much reason to believe that local exports to China will not be affected by a slowdown in the country. For exporters, it may be time to explore other markets or look for value-addition to keep up their exports.
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