Adding to the impression that China is now facing stronger headwinds, a commerce ministry official said exporters were feeling the pain of a weaker euro and that the trade surplus would narrow sharply this year. The main stock index in Shanghai .SSEC fell 5.1 percent to its lowest close in a year and its steepest one day fall in eight months. Many analysts have said that overheating, not a hard landing remains the bigger risk for China.Nevertheless, in a sign that Beijing will be cautious before taking more steps to cool the economy, Premier Wen Jiabao warned over the weekend that the government must avoid “negative consequences” from piling up adjustment policies. The economy’s outlook remains very strong, but it may not have scope to accelerate over the next few months, according to The Conference Board. Its leading economic index, or LEI, for China rose 1.1 percent in March. “Developers may have been front-loading projects in anticipation of controls on the real estate market that were subsequently implemented in late April,” said Bill Adams, an economist with The Conference Board in Beijing.
“The recent behavior of the LEI for China suggests the economic expansion is unlikely to accelerate further through the summer months,” he added. This assessment was in line with a view increasingly prevalent among economists that Chinese growth probably peaked at an 11.9 percent year-on-year pace in the first quarter.
