China's Economy Slows Due To Interest-Rate Hikes

The New York Times reports:

The Chinese economy expanded at an annualized rate of 9.5 percent during the second quarter, the National Bureau of Statistics reported on Wednesday, a figure that, for all its strength, represented a slowdown from the sizzling pace of previous quarters, and underlined the challenges now facing policy makers in Beijing.

China’s economy, the second-largest in the world after that of the United States, expanded 9.7 percent year-on-year during the first quarter of 2011, and 9.8 percent in the last three months of 2010.

While the reading was strong compared with the expansion in the United States, Europe and Japan and was slightly firmer than analysts had projected, it underlined how much more moderate China’s expansion has become in recent months.

Much of the slowdown has been deliberately engineered by the authorities in Beijing, who have over the last year gradually tightened the spigot on the ample lending that has fueled growth, but also contributed to sharp rises in property prices and overall consumer prices. The central bank has also raised interest rates five times since last October, most recently last week.