The Dragon catches a cold

SMARTSHARE

The third reading of the US GDP growth for the fourth quarter came in at 0.6 per cent annualised, on Thursday. This is the slowest growth since 2002 and pales in comparison to the third quarter growth rate of 4.9 per cent annualised.

It is estimated that one percentage point slowdown in the US growth could cut 3.2 per cent from China's export growth and will show up in the economic slowdown. Around 40 per cent of the Chinese GDP is accounted for by exports.

For February, China reported a 56 per cent drop in its trade surplus. China faced severe snowstorms in late January that coincided with the Chinese new year holidays in early February.

Logistical issues may have impacted Chinese exports. But if the trade surplus does reduce in the following months, it would be a clear signal that Uncle Sam's fever is giving China the shivers.

China faces an inflation which refuses to go away despite the CRR being hiked 15 times