China stocks sharply down on economic slowdown

China's stocks plummeted more than 2.89 percent on Tuesday as investors were spooked by weakening auto sales, declining housing prices and slowing imports that points to a marked slowdown of the economy.

Investors dumped shares across the board, with financial, property, manufacturing and energy stocks dropping the most.

The Shanghai composite stock index declined 77.26 points or 2.89 percent to close at 2,595.27 points, on a turnover of 129.6 billion yuan. The Shenzhen index lost more than 300 points, or 2.74 percent.

Though China's exports increased in July to $145.5 billion, but imports growth rate of 22.7 percent for July is much lower than June's 53 percent expansion, the National Bureau of Statistics said Tuesday. The import slowdown doesn't auger well for global recovery, as China's demands for outside raw materials and products will go down.

Another signal of China's slowdown is a weakening auto market. Sales declined 11.9 percent last month from June to 1.2 million vehicles, according to the state-sanctioned China Association of Automobile Manufacturers.

Also, sales of the country's commercial housing in July declined 15.4 percent year-on-year as prices also skidded down.

Weakness in China's demand for imports could dent its ability to help to drive a global recovery, analysts said.

China's voracious appetite for imports has eased as Beijing clamped down on a boom in bank lending and construction. Economic growth slowed from the first quarter's 11.9 percent to 10.3 percent in the second quarter.

Global commodity prices have fallen as surging Chinese demand eased. Mining and other companies that have enjoyed a windfall from China's boom warn their explosive sales growth will slow.

By People's Daily Online