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More signs of economic problems in China

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Demand for raw materials from abroad has been slowing and real estate has been showing signs of cracking for a while. The next few months will be a difficult test for China, but with an economy as large as theirs that requires constant growth, it won't be easy. Any growth below 8% will be a sign of trouble, which means a high risk of social instability. At the moment, China is on a fine line and may fall below that growth level. Bloomberg:

China’s home prices fell in a record number of cities last month and car dealers posted inventory levels that foreshadowed deeper price cuts, adding to signs of slowing growth in the world’s second-largest economy.

Prices of new homes fell from a year earlier in 46 of the 70 cities tracked by the National Bureau of Statistics, the agency said today. Dealerships for Honda Motor Co., Chery Automobile Co., BYD Co. (1211) and Geely Automobile Holdings Ltd. had more than 45 days of inventory at the end of last month, according to an official from the government-backed China Automobile Dealers Association.

Goldman Sachs Group Inc. today joined banks including Citigroup Inc. and UBS AG in lowering its estimate for China’s second-quarter growth after weaker-than-forecast economic data released last week. The nation’s expansion may drop to a 13-year low this year, a Bloomberg News survey this week showed, as Europe’s debt crisis crimps exports and a campaign to rein in property speculation curbs domestic demand.

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