THE NEWS WRAP: IMF warning over economic slowdown in China

IMF chief economist Olivier Blanchard has warned of the possibility of a slowdown in China’s growth rates, with figures showing a 3.1% year-on-year fall in exports during June, with imports down 1.8% in Australia’s largest trading partner.

While China’s imports from Australia are up 11.9% over last year, its global imports of iron ore are down by 7%.

“The country where there is the largest risk in terms of large decrease in growth is China,” Blanchard says.

“The risk is the slowdown in investment comes first and there is not the increase in consumption which is fast enough to compensate.”

Cashed up KKR planning to invest $6.5 billion war chest

Private equity firm Kohlberg Kravis Roberts has raised $6.5 billion in funding through its Asian Fund II pan-Asian private equity fund, and is gearing up to make major investments in the region.

The firm, which has $78 billion under management, recently sold a stake in Kerry Stokes’ Seven West Media for $265 million and has previously made plays for Australian companies including Coles Myer, Perpetual and Pacific Brands.

“Having invested more than $US5.5bn in Asia since 2005, we have demonstrated our commitment to the region, as well as the effectiveness of our successful global-local and partnership approach,” KKR Asia managing partner Joseph Bae says.

US wholesale inventories slump

The US Commerce Department has released new figures showing wholesale inventories fell by 0.5% during May, making the second straight monthly decline and putting pressure on US second quarter GDP growth.

“While upcoming US GDP data will continue to show a fairly weak picture … the jobs market is healthier,” Richard Gilhooly, an interest rate strategist at TD Securities in New York, told Reuters.

The figures were released as US Federal Open Market Committee policy minutes were released, showing “about half” of the participants argued the US quantitative easing program should be wrapped up this year, rather than in mid-2014.

However, policymakers warned any tightening of fiscal policy should be subject to economic growth and an improving labour market.

Overnight

The Dow Jones Industrial Average is down 0.06% to 15291.66. The Aussie dollar is up to US92.26 cents.