China's Economy: May Showers Herald June Gloom

China’s economy is slowing down—fast. That somewhat worrisome fact is reflected in poor growth numbers for May. 

 

Factory output is up only 9.6% from a year ago. Retail sales are growing at a snails pace—at their lowest levels since February of 2011. Producer prices are deflated—down 1.4% for the month of May. 

 

These poor growth figures are creating tremors in the international business world, increasing fears that China’s economy is being dragged down by instability in the Euro-zone. In an effort to combat the slowdown, China’s banks have lowered interest rates and relaxed lending standards. 

 

The one bright spot in the otherwise gloomy picture is trade.  Import and export numbers were way up for May, more than doubling expected figures. Economists attribute the high trade numbers to increased demand from the United States, which is offsetting decreased European demand.