Hai Hai China

http://paper.li/Bunibroto/1309956977/2011/10/02 

Stephen Roach, the chairman of Morgan Stanley Asia, hasd warned 25^th October 2009 that China will faceeconomic slowdown around mid-2010 . He predicted "tough challenges in the years ahead".Mr Roach said: "China's growth model is much more about supply than demand. It's not a sustainable model for China. It's not a sustainable model for any nation." China's exports have declined for 11 consecutive months. However, the country posted its smallest decline in nine months in September, with a 15.2pc fall compared with a year earlier. It happenedaround that time as Roach predicted. Since no freedom of speech existed ever in communist China Press feared to report it and still they are not reporting fearing action from authorities.

But the news is wide-open due to interlinking of share markets.The severe blow is observed by the investors there. China’s stocks fell on Thursday, dragging the benchmark index to the lowest level in as many as 15 months, as investors continued sell-off amid thickening concerns of an imminent economic slowdown.

The Shanghai Composite Stock Index, tracking the bigger of China’s two stock exchanges, dropped 26.72 points, or 1.12 percent, to close at 2365.34 points on Thursday.Reported Peoples daily on 29^th September.

As a result of that stocks affected globally and hit hard in US as well on Friday. Reuter reported U.S. stocks fell on Friday as economic data from China and Europe fueled fears of a global economic slowdown while Morgan Stanley (MS.N) plummeted due fears about its exposure to European banks.
Equities were heading for a fifth monthly fall and their worst quarter since the height of the financial crisis in the fourth quarter of 2008. The S&P 500 .SPX index has lost nearly than 13 percent this quarter and 5.6 percent in September alone.

Reuter said China's manufacturing shrank for the third month in a row and the longest contractional streak since 2009 in a troubling sign for the world economy, which has looked to China as a rare source of expansion,Reuter made clear China's manufacturing sector contracted for a third consecutive month in September, suggesting that the world's second-largest economy is not immune to global headwinds, while factory inflation quickened. The latest reading represents the longest period of contraction since the global financial crisis, when it came in below 50 for eight successive months from August 2008

Many believes China is our greatest enemy so,economic slowdown may please many but not to forget many industry has funds in China so India will also be affected..China has given indication that they are fearing pressure, so Chinese PM made few real gestures on business fraternity during his visit to India.But the real reason is understandable now. According to the World Gold Council, China is the largest buyer of gold behind India. China’s jewelry and investment demand is the fastest growing gold market in the world. The strong domestic growth in China’s economy has given way to a rising wealthy Chinese consumer. In the second quarter, which is usually a quiet period for China, Jewelry demand was 102.9 tonnes, 16% above prior year levels. However, concerns are rising that may hinder Chinese gold demand. On September 22, HSBC released their preliminary PMI survey that showed China’s manufacturing may shrink for a third month in September, the longest contraction since 2009. Aside from jewelry demand, China is a strong force in the investment aspect of gold. In the second quarter, China was the second largest investment market for gold. Total investment demand around the globe amounted to 359.4 tonnes, in which China accounted for 53 tonnes. The Chinese turn to gold as an investment as inflation in the world’s second largest economy heats up. In July, Chinese inflation rose higher than expected to 6.5%, a three year high. Chinese authorities have made it a top priority to slow its economy and inflation rate. The People’s Bank of China has raised benchmark interest rates three times this year, and reserve requirements six times. As a result, inflation in August eased from its three year high, but still remains above 6%.

It is certainly observed in last few days,when prices of gold felt sharply,it is proved that unexpected increase in Mamohan’s regime was only due to open Market policy. With little fall of Chinese economy, is good news is coming for domestic gold investors by the more fall of  gold investors?