The Treasury is taking a close interest in the sustainability of China's economic growth and so far sees it as providing continuing benefits to New Zealand.In a analysis accompanying monthly economic indicators, the government's economic adviser notes som
The Treasury is taking a close interest in the sustainability of China's economic growth and so far sees it as providing continuing benefits to New Zealand.
In a analysis accompanying monthly economic indicators, the government's economic adviser notes some commentators are worried a credit boom will produce asset price bubbles in housing and equity markets in China.
It notes a tightening in monetary policy in China and an appreciation in the yuan after controls were eased. But concludes that China will continue to lead the global recovery.
Although China's economic growth rate is likely to slow further in the second half of 2010, it is likely to remain strong. July consensus forecasts predict calendar year growth of around 10% in 2010 and 9% in 2011.
"We will be doing further work on the sustainability of Chinese growth and its effect on Australia and New Zealand.
"However, at this stage, while there are risks surrounding the expansion of China, we do not expect any of them on their own to derail the economy in the near term, although there will be variability in the growth rate," the Treasury said.
Long term, the most likely scenario is strong growth in China, although at a lower rate than seen in the previous decade.
"This will provide ongoing benefits for New Zealand, as China continues to grow as a trading partner and its demand for our commodities and services remains strong," the Treasury said.
