Forecasts that the pace of China’s economic growth will slow in 2012 have fueled some additional caution in the diamond markets. Wary of the impact that a global slowdown will have on the country’s exports, naysayers contend that Chinese consumers will curb their spending.
With the May 1 Labor Day long weekend approaching – billed as one of the more important retail periods on the country’s calendar – their concerns may be justified. Shanghai’s diamond wholesale market is not as busy as it was this time last year. While the value of China’s diamond imports was up 24 percent in the first two months of 2012, the quantity of goods brought into the country fell 17 percent from the same period last year, according to a report by Xinhua News Agency citing China’s General Administration of Customs.
Consumers there are looking at the global landscape, and with Europe being China’s largest trading partner, the lingering European crisis will no doubt impact the Chinese economy. In February, China posted a rare trade deficit but managed to return to a relatively deflated March surplus.
Still, the dragon certainly has not lost its fire. From an economic viewpoint, the high pace of growth seen in the past few years was perhaps unsustainable. And viewed in a different light, China’s economy is showing signs of maturing, even if it is still in relative infancy.
One sure signal of its maturing economy is the country’s shift from being an investor-driven to a consumer-based market. The timing for this development could not have been better.
While exports may decline in the face of global (or European) economic challenges, local consumption is still on the rise and helping to sustain gross domestic product (GDP) growth projections at around the 8 percent level. Retail sales grew by a healthy 15 percent year on year in the first quarter of 2012, according to the National Bureau of Statistics of China.