From copper to cameras; feeling the heat from China slowdown

Since taking office in March,Chinas new leaders have said they are prepared to tolerate tamer growth and push a restructuring of the economy toward domestic consumption,but there have been mixed messages on how much of a slowing they would tolerate. The flow of data

suggests their task of changing the shape of the massive economy will only get harder.

Wednesdays flash HSBC/Markit Purchasing Managers Index showed output,employment and new orders all declining at a faster pace in July. The overall index of business conditions fell to 47.7 from Junes final reading of 48.2,a third straight month below the 50 line.

We expect economic growth to continue moderating towards 7 per cent, said Annette Beacher,head of Asia-Pacific research at TD Securities in Singapore.

Chinas economy grew 7.5 per cent in April-June from a year earlier,the ninth quarter of slowdown in the past 10 quarters.

While top leaders have stressed in recent weeks that reform is the priority,they were also at pains to assure investors that Beijing would not allow the economy to slip too far. On Wednesday,the industry ministry said it was putting a priority on restructuring and reforming traditional industries such as steel,shipbuilding,cement and aluminium,once drivers of growth,but now plagued with overcapacity.

China cannot change its weak economic growth situation due to still weak external demand and overcapacity problems in the domestic market, said Wang Jian,a senior researcher with the China Society of Macroeconomics.

China has become such a major importer of goods that any weakness in demand is increasingly felt worldwide.

Japan on Wednesday reported annual growth

in its exports to China eased to 4.8 per cent in June from 8.3 per cent in May,and Canon trimmed its sales targets and annual profit forecast,blaming the China slowdown.

In the US,Apple reported quarterly revenues from Greater China dived 43 per cent from the previous quarter an abrupt turnaround for the Silicon Valley giant which has come to count on endless growth in the worlds biggest smartphone market. The same goes for commodity exporters. China consumes around half of the worlds iron ore and coal and 30-40 per cent of global production of base metals.