China ETFs: Suppressing Growth for the Greater Good | ETF Trends

The Chinese government may have enacted some self-imposed austerity measures, but its economy is still expanding at an impressive rate. Despite any negative impact it might have on China exchange traded funds (ETFs), the country’s leaders believe that fomenting slower growth is the right thing to do. But let’s define “slow.”

The Chinese economy expanded 10.3% in the second quarter, compared to an increase of 11.9% in the first, reports Sharron Lafraniere for The New York Times. Inflation fell to 2.9% in June, which is below the government’s target of 3%. Economists were largely in agreement with the slower growth, arguing that property prices needed to be brought down to realistic levels. [China ETFs: Why They’re Not Running Scared.]

Industrial output increased by 13.7% in June year-over-year; however, that number was down from the 16.5% increase in May year-over-year. If growth slows too much, there is the possibility that lower Chinese demand for raw materials would suppress commodities prices and threaten the total global recovery.

Sheng Laiyun, spokesman for the National Bureau of Statistics in China, commented that “a slowdown will benefit the economy because it will prevent it from growing too fast and being overheated,” according to UPI.