China: heading for a crunch?

China's economic slowdown has fuelled fears of an American-style credit crunch.

It became obvious early this week how much investors have been counting on China "to haul the global economy out of the mire", says Clarissa Tan on Spectator.co.uk. Assets ranging from metals to Prada shares slumped when China reported a GDP figure for the first quarter that was far weaker than expected. With Europe still in recession and recent US data shaky, that was the last thing they needed.

China's economy grew by 7.7% year-on-year between January and March. Most forecasters had pencilled in 8%. The final quarter of 2012 had seen the first acceleration in annual GDP growth to 7.9% in eight quarters. But the small bounce of recent months already seems to be fading. March data show that the quarter ended badly. Exports, fixed-asset investment and industrial production all decelerated. Retail sales were tepid. Weakness was "broad-based on the domestic front" in the first quarter, says JP Morgan's Zhu Haibin.

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