China Finally Admits Its Economy Faces Challenges
Jiabao's comments came after two key measures of China's manufacturing sector showed slower growth in June compared to May. The Federation of Logistics and Purchasing reported on Friday that its output index fell to 55.8 from 58.2. A similar survey by HSBC also showed moderation.
Adding to the uncertain outlook, many large exporting nations are voicing concerns that the problems in Europe and the austerity measures that are being put in place there will either halt economic expansion or, worse, cause a double-dip recession. June unemployment numbers in the U.S. showed that the American economy lost 125,000 jobs in June. The figure was higher than most consensus estimates.
On Friday, Goldman Sachs cut its forecast for China's GDP growth this year to 10.1% from 11.4% citing government restrictions on lending and real estate.
China may be lucky to post 10% GDP growth this year -- especially if data from Europe and the U.S. continues to show that the they cannot match the recovery that occurred during the first four months of the year.