However, while the US is slowing down, the Chinese economy is growing by leaps and bounds. The National Bureau of Statistics (NBS) reported this week that China's GDP grew by 11.3 percent in the second quarter, which is the fasted pace since 1994. At the root of this expansion is excess money supply, still growing at over 18 percent annually.
This is partly the result of the huge trade surplus with the US, since the Chinese central bank mops up dollars that flow into China as payment for goods and returns yuan to local exporters. Banks then lend out this surplus of yuan, which boosts investments and causes the economy to overheat.
As a result, fixed-asset investment increased by 30 percent in the first six months of 2006, while industrial output grew by 20 percent in June. Retail sales are up 14 percent in June from the same month a year earlier.
The textile sector in China is no exception. The NBS reported that yarn production in June totaled a record 1.565 million tons, up over 14.6 percent from a month earlier. Cumulative yarn production for the period of January to June 2006 is at 7.74 mio tons, or 22.8 percent more than a year ago.
marketing@alchempro.com
