News / Economy

China's Slowing Economy a Mixed Blessing for Asian Neighbors

Employee works inside silk factory in Neijiang, Sichuan province, July 3, 2013.
Employee works inside silk factory in Neijiang, Sichuan province, July 3, 2013.
Ron Corben
— Economists say China's slowing economic growth may be a cause for concern for some of its neighbors in Asia, especially those that have become more dependent on China's booming economy in recent years.

This week Beijing announced that its economy grew 7.5 percent in the second quarter of the year (compared to 2012) -- a figure largely in line with observers’ expectations, but still a dramatic departure from years of near 10 percent growth.  
 
This slowdown has been influenced partly by the continuing downturn in the international economy as well as Beijing’s policies to cool some economic sectors by tightening credit and allowing the value of China’s currency, the Renminbi, to rise.
 
The slowing Chinese economy has sent ripples of concern across the Asia Pacific. China's continued growth; largely due to government investment and easier credit, has been important for helping the region withstand the global financial crisis since 2008.
 
But Asian Development Bank principal economist Donghyun Park said the slower growth indicates China’s past policy of "growth at all costs" may have passed.
 
"The Chinese authorities are more than prepared to swallow or accept slower growth in exchange for greater stability down the road," the economist said. "That is why they are consciously, deliberately if you will, tolerated the tightening of the credit conditions in the interbank market. So the past mentality, the past way of thinking of a growth at all costs very fortunately and appropriately -- that's coming to an end."
 
In recent years, China’s government has helped spur investment and lending to keep its economy growing at nearly 10 percent per year -- a rapid expansion that lifted millions out of poverty, but also led to rising concerns over its environmental and social impact.
 
Now, with Beijing prepared to bring growth under control, regional economies, such as Australia and Indonesia, key beneficiaries of China's demand for raw materials, have already warned of slower growth in key industries.
 
ADB's Park said the outlook for the Asia Pacific is a mixed one in light of China's slower growth, but ultimately what is good for China is also good for its neighbors.
 
"The exact impact will differ from country to country," he noted. "Outward oriented export dependent economies will suffer more than Indonesia or the Philippines where domestic demand plays a greater role. Overall in the short term China's slowdown has negative ramifications but I think a more sustainable growth in China, but it's also a good thing for the rest of the region."
 
Doug Clayton, a senior executive of emerging market finance house, Leopard Capital, said China's rapid growth has led to new investment in economies such as Cambodia, as firms relocate due to China's higher costs. Clayton remains positive about China's impact on the region's economies.
 
"It bodes pretty well. China has this vast potential consumer market and if they develop it, I think South East Asia is a good supplier of things that China needs, whether its food products or electronic components or car parts," he said.
 
Clayton added that as China's economy further matures the outbound tourism market will be a boon for economies such as Thailand.
 
According to economists, China's many challenges include enacting steps to develop a stronger, sounder and more efficient financial system and moving further away from a growth policy based on excessive lending and investment.

You May Like

Mali's Female Basketball Players Rebound After Islamist Occupation

Islamist extremists ruled northern Mali for most of 2012, imposing strict Sharia law, and now some 18 months later, the region is slowly getting back on its feet More

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

Many Chinese-made products go unsold, for now, with numerous Vietnamese consumers still angry over recent dispute More

Koreas Mark 61st Anniversary of War Armistice

Muted observances on both sides of heavily-armed Demilitarized Zone that separates two decades-long enemies More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Students in Business for Themselvesi
X
Mike O'Sullivan
July 26, 2014 11:04 AM
They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.
Video

Video Not Even Monks Spared From Thailand’s Junta-Backed Morality Push

With Thailand’s military government firmly in control after May’s bloodless coup, authorities are carrying out plans they say are aimed at restoring discipline, morality and patriotism to all Thais. The measures include a crackdown on illegal gambling, education reforms to promote students’ moral development, and a new 24-hour phone hotline for citizens to report misbehaving monks. Steve Sandford reports from Bangkok.
Video

Video Virtual Program Teaches Farming Skills

In a fast-changing world beset by unpredictable climate conditions, farmers cannot afford to ignore new technology. Researchers in Australia are developing an online virtual world program to share information about climate change and more sustainable farming techniques for sugar cane growers. As VOA's Zlatica Hoke reports, the idea is to create a wider support network for farmers.
Video

Video Airline Expert: Missile will Show Signature on Debris

The debris field from Malaysia Airlines Flight 17 is spread over a 21-kilometer radius in eastern Ukraine. It is expected to take investigators months to sort through the airplane pieces to learn about the missile that brought down the jetliner and who fired it. VOAs Carolyn Presutti explains how this work will be done.
Video

Video Treatment for Childhood Epilepsy Heats up Medical Marijuana Debate

In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Airbus Adds Metal 3D Printed Parts to New Jets

By the end of this year, European aircraft manufacturing consortium Airbus plans to deliver the first of its new, extra-wide-body passenger jets, the A350-XWB. Among other technological innovations, the new plane will also incorporate metal parts made in a 3-D printer. VOA's George Putic has more.
Video

Video AIDS Conference Welcomes Exciting Developments in HIV Treatment, Prevention

Significant strides have been made in recent years toward the treatment and prevention of HIV, the virus that causes AIDS. This year, at the International AIDS Conference, the AIDS community welcomed progress on a new pill that may prevent transmission of the deadly virus. VOA’s Anita Powell reports from Melbourne, Australia.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.