The GDP shows indication of a gradual change from manufacturing to services driven by consumption. This could see a transition from an export based economy to a consumption based economy.
In line with that, economists are also predicting a new normal in growth for China in that future growth will be in the 6% - 7% range.
The slow growth in manufacturing and fixed asset investment could impact upon commodities driven economies, such as Australia and Brazil.
Most economists believed that China has still some room for stimulus, either by reducing its interest rates and capital reserve ratio to stabilise growth.And herein lies the problem. If China continues to reduce its interest rates it will only serve to make the US$ stronger. Amidst a stronger US$, inflation in the US will be subdued. Earnings from major multi-national corporations will also fall which impact upon their investment in capital goods and less willing to increase the wage of employees. These factors will cause the US economy to slow down as well.
So with slow wage growth, low inflation and a potentially slow down in the US economy, the Federal reserve will unlikely to raise interest rates in the foreseeable future.
The world economy it seems is caught in a vicious circle.
The above are just my opinion.
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