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Monday, June 20, 2011

China's Boom Beginning to Fade

Several economists in China have begun to lower their growth forecasts for this year and next year to about 8.5 percent, from earlier forecasts of 9 percent to 10 percent, and have started to warn about the possibility of a sharp rise in nonperforming loans at big state-owned banks.

Apparently, Chinese businesses are also trying to cope with rising labor costs, energy shortages and higher borrowing costs due to the global economy and the increasing in Chinese debt.

While few analysts say China’s growth will slow to less than 8 percent in the next year, more are painting a troubling picture. The Chinese stock market has been in a slump for much of the past two years, the real estate market looks weaker and inflation is running at a 34-month high, according to recently released data.

These reports are making investor's rethink the Chinese economy. They are being released at a time of heightened concern about slowing economic growth in other parts of the world, including the United States, Europe and Japan.

What are your thoughts on the global stock market? Do you think China's grip on the global economy is beginning to loosen? Or is this simply a phase that China is bound to surpass?

All comments are welcome.

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