News / Economy

China's Economic Growth Slows

China GDP growth, 2010 - 2013
China GDP growth, 2010 - 2013
VOA News
New economic data from China show the country’s growth slowing for the second consecutive quarter much as expected.  
Official figures from the country’s statistics bureau indicate the economy grew 7.5 percent in the April to June period, compared to the same period a year earlier.

“China's economy has maintained a steady growth,” said Sheng Laiyuan, spokesman for China's National Bureau of Statistics, “The GDP totaled 24.8 trillion yuan ($4 trillion U.S.) in the first six months, up 7.6 percent from a year earlier. GDP grew 7.7 percent in the first quarter and 7.5 percent in the second."

Other growth indicators - such as factory output and investment - also weakened compared to a year ago.

Sheng Laiyuan said that the figures are all within the country's economic targets, but added that China's economic conditions are still “complex and changeable.”

The continuing slowdown comes as Chinese leaders push through measures aimed at rebalancing the country's economy, diminishing its reliance on manufacturing for exports and government investment in core industries.

Shaun Rein, managing director at the China Market Research Group, says that the latest data show China’s economy is still overly reliant in investments in physical assets, such as real estate and infrastructure.

“Fixed asset investment grew 20.1 percent year over year, that is still far too high, we should be more on the 18 to 19 percent range,” he said.

As Economy Slows, China Tries to Rebalance Industry
 
Rein says that more of the economy needs to depend on consumer spending and the latest figures show that may be happening. Retails sales grew 13.3 percent in the first half of 2013 - an indication that consumers are starting to account for a bigger slice of GDP growth.

“You still see continued consumer confidence, continued spending going forward,” he says, “but it's not an easy switch and there will be pains in the economy going forward as we make that shift.”

The Chinese government has been enacting a series of policies to curb speculation in sectors like real estate, construction and banking, which traditionally accounted for much of the Asian giant’s economic growth.

Sheng Laiyuan said that such interventions will prove essential in the long term.

“Some measures, including the intensified property-tightening campaign, new rules to curb misuse of public funds and the exit of some previous stimulus policies, will inevitably have some impact on growth in the short term, but they will benefit our economy in the long run," he said during Monday's news conference.
Further Signs of Slowing Ahead

In a research note published on Monday, Nomura economists Zhiwei Zhang and Wendy Chen said that growth remains on track to achieve government's target of 7.5 percent for 2013.

But the economists revised down their GDP growth forecast for next year, from a previously forecasted 7.5 percent to 6.9 percent.

Zhang says that a decline in the workforce, as well as delays in structural reforms are contributing factors in the decision to lower estimate growth for 2014.

“The working-age population dropped in 2012 - the first time in at least 20 years - and this is a really big deal, because it changed the supply of labor and make the labor market much tighter then before and push up wage growth, and hurt China comparatively particularly in the export sector,” Zhang said in a conference call on Monday.

At the same time, Zhang says, policymakers have overlooked the development of private companies.

“The government tried in the past five years to encourage private investment and open up monopolies in the protected sectors, but there is very little action to follow up with those guidelines,” Zhang said.

In recent months, senior government officials have stressed the need to achieve a more balanced development, and upgrade the quality and efficiency of Chinese industries.

Last week, China's Finance Minister Lou Jiwei said the country's economy could expand less than the government's target in 2013, and added that in the future China could tolerate growth as low as 6.5 percent.

You May Like

Turkey's Controversial Reform Bill Giving Investors Jitters

Homeland security reform bill will give police new powers in search, seizure, detention and arrests, while restricting the rights of suspects, their attorneys More

Audio Slideshow In Kenyan Prison, Good Grades Are Path to Freedom

Some inmates who get high marks could see their sentences commuted to non-custodial status More

'Rumble in the Jungle' Turns 40

'The Champ' knocked Foreman out to regain crown he had lost 7 years earlier when US government accused him of draft-dodging and boxing officials revoked his license More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Victorious Secularists Face Challenge to Form Government in Tunisiai
X
Henry Ridgwell
October 30, 2014 11:39 PM
Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Victorious Secularists Face Challenge to Form Government in Tunisia

Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Africa Tells its Story Through Fashion

In Africa, Fashion Week is a riot of colors, shapes, patterns and fabrics - against the backdrop of its ongoing struggle between nature and its fast-growing urban edge. How do these ideas translate into needle and thread? VOA’s Anita Powell visited this year’s Mercedes Benz Fashion Week Africa in Johannesburg to find out.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7893
JPY
USD
107.68
GBP
USD
0.6238
CAD
USD
1.1214
INR
USD
61.185

Rates may not be current.