Chinese Growth Remains Strong
Even so, this report is very bullish for the Chinese economy. The reason is that this slowdown was the result of a temporary factor, namely the harsh and cold winter weather with large quantities of snow, which caused massive supply disruptions. This however won't be a factor during this quarter so growth will bounce back.
What is particularly bullish is the fact that growth in domestic demand seems to be accelerating, which will enable China to keep strong growth even as higher oil prices and the U.S. recession cause its trade surplus to fall. Interestingly, the trade surplus fell even in dollar terms compared to a year earlier. In yuan terms the decline was even bigger, and relative to GDP the decline was much bigger. Although some of this decline could be attributed to the aforementioned supply disruptions, it should be clear that domestic demand is now growing faster than production.
This not only means that China is decoupling, it also means that the Chinese is to an increasing extent themselves enjoying the fruits of their hard labor, instead of sacrificing themselves for American consumers.