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China's economy grinding ever slower
By Catholic Online (NEWS CONSORTIUM)
May 13th, 2012
Catholic Online (www.catholic.org)
May 13th, 2012
Catholic Online (www.catholic.org)
China's economy has been slowing over the past several months. As
national figures suggest, the data for the month of April detailed
sharper than expected declines in investment and industrial production.
Statistics provided by the National Bureau of Statistics suggests that
more aggressive action may be needed to get the world's second-largest
economy back on track.
"China's economy is even weaker than thought, with industrial production growth back in single digits for the first time since the global financial crisis and electricity production flat lining," Alistair Thornton of IHS Global Insight said.
"We believe the government will step up efforts to stimulate the economy, even as genuine concerns remain regarding the very real possibility of over-stimulating," he said.
China's economy grew 8.1 percent in the first quarter of the year, which is still a lively rate but its slowest pace since 2009. The Chinese economy was below the previous quarter's 8.9 percent, but above the government's 7.5 percent target for the year.
China's leaders face a challenge in keeping inflation under control while spurring growth. Businesses are under pressure from wages and other costs. Consumers are feeling a pinch, too, as already high prices outstrip rising incomes.
Other troublesome data reported this week showed investment in factory equipment and construction, so-called fixed-asset investment, rose 20.2 percent in January-April. That compared with a 25.4 percent rate of increase a year earlier.
Investment in real estate climbed 18.7 percent, down from 34.3 percent growth in the first four months of last year and from 23.5 percent growth in January-March.
China has recently announced that its trade surplus widened in April as imports barely budged, sharpening fears the economy is not doing enough to stimulate domestic demand and counter a slowdown.
There are also indications that China's slowdown is hurting demand for oil, industrial components and consumer goods at a time when U.S. and European growth are weak.
Last year's unexpectedly steep plunge in demand for China's exports due to U.S. and European economic woes prompted communist leaders to change course and ease controls on bank lending to help struggling manufacturers.
More easing measures are expected shortly, with most analysts predicting the central bank will soon reduce reserve requirements for commercial banks.
Growth has fallen steadily since 2010 as a slump in global demand battered exporters and Beijing tightened lending and investment curbs to cool an overheated economy and surging inflation.
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