News / Asia

China's New Leaders Face Economic Challenges

China's New Leaders Face Economic Challengesi
|| 0:00:00
X
William Ide
November 01, 2012 2:04 PM
China's once-roaring economy is showing signs of slowing and is on course for its worst year of economic growth in more than a decade. Steering the country's economy in the right direction is one of the key challenges China's new leaders will face as a once-in-a-decade changing of the guard begins on November 8. VOA's William Ide has more from Beijing.
William Ide
China's modern cities are built on a massive scale, with architecture in places such as Beijing that ranges from avant-garde to out of this world. But, just above Beijing's busy street corners are signs of the threats China's economy is facing.

"I think that the empty buildings that you see cut to the core of how China has been driving growth over the past few years," says Beijing based-economist Patrick Chovanec. "It's been an investment boom and so China has been driving growth by creating capacity, capacity in housing, in infrastructure, in production. And, in order for that growth to be real, there has to be an end user and that's the challenge, where does the end user come from."

When the global financial crisis hit in 2008, China insulated itself from the slowdown by launching a nearly $590 billion stimulus. But now, as the country's annual growth is expected to slow to below eight percent this year, economists caution that same strategy will not work.

"That investment boom that has kept the Chinese economy growing in the face of the global economic slowdown, that investment boom is breaking down, it is buckling under its own weight," says Chovanec.  "The bad debt and to some extent, the inflation that has been created by pumping the economy full of money has created an unsustainable situation."

Economists say about 80 percent of China's massive 2008 stimulus package went to state-owned enterprises, which still dominate the economy. Weakening their influence is a key challenge for China's new leaders, says economics professor Hu Xingdou. Hu says that state enterprises account for about a third of the Chinese economy.

"But, even with that proportion, they lead the Chinese economy," said Hu.  "Even though they constitute only 30-40 percent of the Chinese economy, they control China's economy and all of those sectors where money is made."

Breaking the monopoly that state-run enterprises have over the economy will not be easy, especially because of the political power and influence they wield.

"Because there are two main problems with the Chinese economy," Hu added.  "One is that power interferes too much in economic issues, the second issue is monopolies, and the impact they have on the structure of the economy."

It remains unclear what plans China's new leaders have for the state-owned enterprises, but the stakes are high. Maintaining a stable economy is a key reason why Chinese remain willing to accept the party's continued monopoly on political power.

You May Like

At Khmer Rouge Court, Long-Awaited Verdict Approaches

First phase of trial, which is coming to an end, has focused on forced exodus of Phnom Penh in 1975 - and now many are hopeful justice will be served More

Video When Fighting Eases, Gazans Line Up at Bakeries

When there is a lull in the conflict, residents who have been hunkered down in their apartments rush out to stock up on food and other necessities More

Video Information War Rages Alongside Real One in Ukraine

Downing of Malaysian airliner, allegations of cross-border shelling move information war in war-torn country to a new level More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Information War Rages Alongside Real One in Ukrainei
X
Al Pessin
July 31, 2014 8:13 PM
The downing of the Malaysian airliner two weeks ago, and allegations that Russians are shelling Ukrainian troops across the border, have moved the information war swirling around the Ukrainian conflict to a new level. VOA's Al Pessin reports from Kyiv.
Video

Video Information War Rages Alongside Real One in Ukraine

The downing of the Malaysian airliner two weeks ago, and allegations that Russians are shelling Ukrainian troops across the border, have moved the information war swirling around the Ukrainian conflict to a new level. VOA's Al Pessin reports from Kyiv.
Video

Video When Fighting Eases, Gazans Line Up at Bakeries

When there is a lull in the conflict in Gaza, residents who have been hunkered down in their apartments rush out to stock up on food and other necessities. Probably the most important destination is the local bakery. VOA’s Scott Bobb reports from Gaza City.
Video

Video US-Funded Program Offers Honduran Children Alternative to Illegal Immigration

President Obama and Central American leaders recently agreed to come up with a plan to address poverty and crime in the region that is fueling the surge of young migrants trying to illegally enter the United States. VOA’s Brian Padden looks at one such program in Honduras - funded in part by the United States - which gives street kids not only food and safety but a chance for a better life without, crossing the border.
Video

Video 'Fab Lab' Igniting Revolution in Kenya

The University of Nairobi’s Science and Technology Park is banking on 3-D prototyping to spark a manufacturing revolution in the country. Lenny Ruvaga has more for from Nairobi's so-called “FabLab” for VOA.
Video

Video Gazans in Shelled School Sought Shelter

Israel's air and ground assault against Hamas-led fighters in Gaza has forced many Palestinians to flee their homes, seeking safety. But safe places are hard to find, as VOA’s Scott Bobb reports from Jabaliya.
Video

Video Rapid Spread of Ebola in West Africa Prompts Global Alert

Across West Africa, health officials are struggling to keep up with what the World Health Organization describes as the worst ebola outbreak on record. The virus has killed hundreds of people this year. U.S. President Barack Obama and other world leaders are watching the developments closely as they weigh what actions, if any, are needed to help contain the disease.
Video

Video Michelle Obama: Young Africans Need to Embrace Women's Rights

U.S. first lady Michelle Obama urged some of Africa's best and brightest to advocate for women's rights in their home countries. As VOA's Pam Dockins explains, Obama spoke to some 500 participants of the Young African Leaders Initiative, a six-week U.S.-based training and development program.
Video

Video Immigrant Influx on Texas Border Heats Up Political Debate

Immigrants from Central America continue to cross the U.S.-Mexico border in south Texas, seeking asylum in the United States, as officials grapple with ways to deal with the problem and provide shelter for thousands of minors among the illegal border crossers. As VOA's Greg Flakus reports from Houston, the issue is complicated by internal U.S. politics and U.S. relations with the troubled nations that immigrants are fleeing.
Video

Video Study: Latino Students Most Segregated in California

Even though legal school segregation ended in the United States 60 years ago, one study finds segregation still occurs in the U.S. based on income and race. The University of California Los Angeles Civil Rights Project finds that students in California are more segregated by race than ever before, especially Latinos. Elizabeth Lee reports for VOA from Los Angeles.

AppleAndroid