Chinese economy grows 8.1% in Q1

With Europe struggling and the U.S. recovery appearing to ebb, signs of strength from China, the world’s second-largest economy, could still help allay fears of a global slowdown.

Concerns had emerged last year that the combination of weakening export demand and a slumping domestic property market would weigh on China.

Investors, many of whom had been waiting for Beijing to announce stimulus measures, had grown worried at the government’s perceived inaction.

But Beijing has been quietly injecting cash into the economy, encouraging banks to lend more and easing restraints on credit flows. A larger-than-expected Rmb1tn ($159bn) in new loans in March, announced on Thursday, was the latest evidence of its shift towards a moderately pro-growth stance.

A gradual, managed slowdown in the economy is exactly what China has been trying to achieve. Premier Wen Jiabao said last month that the country was aiming for 7.5% growth this year, its lowest target in almost a decade.

Although most analysts still expect it to surpass that target, the low number is an indication of the government’s ambition to steer the economy towards what it sees as a slower, steadier growth pattern.

Over the past decade, the Chinese economy has been powered by the twin engines of exports and capital investment, but both are now running out of steam.

Exports have been increasing more slowly since the global financial crisis and the outlook remains bleak. As for investment, though China still needs far more spending on infrastructure from water pipes to highways, its capital goods expenditures account for nearly 50% of its economy, a level that is seen as unsustainable by many economists and officials.

Beijing’s oft-stated goal has been to fire up consumption as a new engine for the economy. Along with subsidies for cars and household appliances, the government has been increasing the minimum wage to promote income growth and boost the purchasing power of ordinary citizens.



Leave a Reply

Reset password

Enter your email address and we will send you a link to change your password.

Get started with your account

to save your favourite homes and more

Sign up with email

Get started with your account

to save your favourite homes and more

By clicking the «SIGN UP» button you agree to the Terms of Use and Privacy Policy
Powered by Estatik
error: Content is protected !!