SHANGHAI (AFP) – With booming retail sales, record lending and a soaring stock market, China accounted for nearly all of the world&&9;s growth last quarter, but experts warn not to expect a China-driven global recovery.

The global economy grew 1.6 percent quarter-on-quarter in the three months ending June 30. Yet excluding China&&9;s 14.6 percent rise in gross domestic product, world GDP was flat or contracted slightly, according to Barclays Capital.

But as the world searches for a beacon of growth, economists warn China alone is not big enough to offset plummeting US consumption and a growing number of voices here and abroad are skeptical of the Chinese figures.

"China cannot be the locomotive for global growth," American economist Nouriel Roubini, who became famous for predicting the financial crisis, told a conference in Australia this week.

Roubini forecast US unemployment would rise to 11 percent next year, consumers would remain "shopped out" and industrial production would continue to fall -- huge challenges that China is simply not equal to yet.

China&&9;s growth has long been driven by US demand and even with 1.3 billion consumers, economists say it is nearly impossible for China to pick up the slack.

Household consumption in China was 15 percent of US levels last year. For every one percent drop in American consumption, Chinese consumption would have to increase by 6.5 percent to offset US belt tightening, Hong Kong-based Merill Lynch economist T.J. Bond said.

Chinese consumption grew at 9.6 percent last year and Bond predicted that growth would remain roughly flat in the next two years.

"It would be overly optimistic to expect it to head towards mid-double digits," he said.

The biggest winner in any spending spree would be China itself. Consumer goods only account for 12.5 percent of China&&9;s imports, Bond said.

Other countries have benefited more from China&&9;s investment boom over the past five years, with commodities accounting for 31 percent of GDP and capital goods making up 23 percent, Bond said.

"A consumer boom in China would have a much smaller spillover impact on the rest of the world," he said online payday loans.

Other countries may benefit from Beijing&&9;s four trillion yuan (586 billion dollar) stimulus plan to steer China through the financial crisis by spending heavily on infrastructure projects, Sherman Chan, a Sydney-based economist at Moody&&9;s Economy.com said.

"If construction is gathering steam again, it means it will help other exporters such as Australia or Latin American countries that export resources to China," she said.

But many, including the finance ministry, fear stimulus money from the package and the record 7.4 trillion yuan in new loans extended in first half of the year was diverted into stocks and property for quick profits instead of helping the real economy.

The flood of easy credit has helped push the value of the Shanghai market up nearly 90 percent since the beginning of the year.

At the same time, skepticism over China&&9;s economic data is also rising.

The central government&&9;s GDP data did not match what was released individually by China&&9;s 31 provinces and municipalities, with the regional sum totalling 15.38 trillion yuan -- ten percent higher than the figure released by the National Bureau of Statistics.

Guffaws greeted the statistics bureau&&9;s announcement that average urban wages rose 13 percent in the first half, reported The Global Times, a newspaper published by the Communist Party.

An editorial in The China Daily this week cited a new survey indicating 91 percent of respondents doubted official figures.

In an article entitled "Bogus Boom", former US Treasury Department consultant John Makin warned the statistics can be misleading because Beijing measures GDP growth by counting money dispersed to state-owned enterprises or provincial governments -- even if a use for the funds had yet to be found.

"So the government can easily control the pace of growth by the pace at which it releases funds," Makin wrote.

Experts doubtful about China-led recovery

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DETROIT (Reuters) – American Axle & Manufacturing Holdings Inc (AXL.N) reported a bigger-than-expected quarterly loss on Wednesday due to steep production cuts by automakers and said it remained uncertain whether it could complete a debt restructuring outside of bankruptcy.

Shares of the auto parts supplier were up more than 9 percent in morning trading after falling as much as 13 percent.

American Axle, which relies on GM for about three-quarters of its sales, said it was working with key stakeholders on amendments to existing credit agreements and other financing arrangements in an effort to restructure its balance sheet outside of bankruptcy.

"American Axle&&9;s primary objective is to complete its restructuring outside of a bankruptcy process," the company said in a filing with the U.S. Securities and Exchange Commission after reporting second-quarter results.

"However, there can be no assurance that we will be successful in reaching agreements with these parties and avoid filing for bankruptcy," American Axle said.

American Axle&&9;s agreement with lenders that waives covenants under its credit facility expires on August 20.

The company, like other U.S. auto parts suppliers, has been hit hard by production shutdowns at General Motors Co (GM.UL) and Chrysler Group LLC associated with the automakers&&9; bankruptcy restructurings.

Analysts have said American Axle is at risk of joining other major parts makers such as Lear Corp (LEARQ.PK) and Visteon (VSTN.PK) in bankruptcy.

Two people familiar with the matter told Reuters earlier in July that American Axle had been working with legal advisers, including law firm Shearman & Sterling, as it considers restructuring options, including bankruptcy fast cash loans.

The second-quarter net loss narrowed to &&6;288.6 million, or &&6;5.20 per share, from &&6;644.3 million, or &&6;11.89 per share, a year earlier.

The results included &&6;3.46 per share in one-time charges, mostly for asset impairments and workforce reductions, the company said.

Excluding the charges, American Axle lost &&6;1.74 per share. On that basis, analysts on average had expected a loss of 77 cents, according to Reuters Estimates.

Sales fell to &&6;245.6 million from &&6;490.5 million.

American Axle said the extensive shutdowns by GM and Chrysler accounted for &&6;203.6 million in revenue declines.

GM emerged from bankruptcy on July 10 by selling most of its assets to a group funded by the U.S. Treasury. Chrysler also exited a two-month bankruptcy in early June by completing a similar sale to a new company led by Fiat SpA (FIA.MI).

American Axle is a critical parts supplier to GM, producing axles for its full-sized pickups and SUVs, two areas where sharp production cutbacks by the automaker have applied severe pressure to parts companies.

Shares of American Axle were up 9.2 percent at &&6;2.85 on the New York Stock Exchange after falling as low as &&6;2.26 earlier in the session.

(Reporting by Soyoung Kim, editing by Gerald E. McCormick and Lisa Von Ahn)

American Axle cites bankruptcy risk after deep loss

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BEIJING, Aug. 5 -- Chinese steel mills would prefer to import more iron ore from Brazil rather than Australia after the detention of four Shanghai-based employees of multinational miner Rio Tinto on charges of commercial espionage, according to data specialist ASXMarine. Photo taken on July 9, 2009 shows the Rio Tinto Ltd. Office in Shanghai, east China.(Xinhua, FilePhoto)
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Spot iron ore vessel bookings from Brazil to China surged to a record 39 in July, from 24 in the previous month, Reuters quoted the data from ASXMarine.

Vessel bookings from Australia's main iron ore ports to China dropped to 31, down from 40 compared to the previous month and the lowest reading since February after the Rio Tinto scandal.

Chinese steelmakers have begun to hold their imports from Australian miners and are switching to Brazilian ore instead, domestic ports have witnessed.

Zang Dongsheng, deputy general manger of Rizhao Port Group, China's largest iron ore port which accounts for a fifth of the country's iron ore deliveries, said some of his customers have reduced their orders from Australia and turned to Brazil. But the exact figures would be available only in September as shipments from Brazil and Australia would be delayed by one or two months.

China's main ports received 56.5 million tons of iron ore in July, up 35 percent from the same period last year, the Ministry of Transport said yesterday easy payday loans.

Iron ore imports rose 29.3 percent year on year, to 297 million tons, in the first half of this year, while traders imported 131 million tons, up 90.4 percent from last year.

The China Iron and Steel Association (CISA) said last Friday that excess iron ore imports had distorted the demand-supply situation and hampered its position at negotiations with global miners on new long-term benchmark prices.

It also said foreign iron ore suppliers promoted massive selling on the cash market, leading to huge stockpiles and urged to limit import licenses.

However, the iron ore import figures in July reflected orders in May as it takes more than a month to deliver ore from Australia and Brazil, said Zang from Rizhao port.

Chinese steel mills started to reduce orders ever since CISA rejected the 33-percent cut offered by miners in May and held out for more discount, he said.

China News Service reported yesterday that CISA halted talks because iron ore spot prices have been "seriously distorted", citing a statement issued by the association.

However, no such statement could be found on the association's website, and its official surnamed Wang said the report was not true and talks were ongoing.

(Source: China Daily)

China may run with Brazil ore

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