As China grows, so does its impact on the global economy and in turn so does its impact on small businesses here in America. Unfortunately, this growth is starting to slow and at a pace that may be too fast to achieve the so called soft landing. Indeed, China released data on their GDP growth for Q2 2012. Although the validity of some of their data is questionable, we must work with what we have. From the release, China’s Q2 GDP report came roughly in line with expectations, with real GDP rising 7.6% over year-ago following 8.1% growth in Q1.

The 2Q GDP report and the June macro data have been consistent with the view that the Chinese economy continued to show sluggish growth momentum in Q2, driven by external and internal headwinds. While the June macro data seems to show some signs of stabilization in demand conditions, it seems there is still de-stocking pressure on raw material inventories in the industrial sector, as suggested by the slowing June import figures. On the other hand, it is worth highlighting two pieces of positive news: (1) Inflation pressure has come off notably, allowing the room for further policy easing; (2) Employment conditions seem to still hold rather steady, which suggests that the likelihood of a big macro stimulus program is on the low side. With regard to the growth outlook, on the external front, uncertainties surrounding the euro area sovereign debt crisis still persist. Besides, while the US economy has been an outperformer among developed economies, latest figures on the labor market and business surveys have also suggested downside risks. The sluggish external environment will continue to put stress on China’s export sector. Click on the link below to see CNN’s take.