It was not a huge surprise. As the world's largest exporter, China is being buffeted by a downturn in demand from its markets in Europe and elsewhere.
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Every single country that has followed this model has ended up with a serious debt problem”
End Quote Michael Pettis Peking University
But the figure of 7.5% was also a clear sign that China's leaders want officials to focus on more sustainable economic growth.
Many economists are stressing that China needs to undertake fundamental reforms if it is to avoid serious economic problems in the future.
4 comments:
China has been experiencing tremendous growth in a time that many countries are facing economic problems. The article brings up good points that one of the reasons for this economic growth was due to the authorities making an investment. This investment allowed the Chinese to build new infrastructure like airports, roads and office buildings. However, China is going to reach a point where investments are no longer viable. Another reason why I think China's growth is so high is because they have been building from scratch. When the United States first became industrialized, they experienced the same growth China currently has. I think its critical for China leaders to think of new ways to have sustainable growth and not falling two steps back.
I agree with you Shannon in that China's growth is a little misrepresented because they did start from scratch. That has allowed their economy to portray high levels of growth, when in reality it's simply faster growth. Similar to what was seen in the Great Leap Forward, China's growth is simply unsustainable if they continue to make the investments they do. They need to learn from their own mistakes in order to create a stable economy. If China ever wishes to become a world economic power and rival the US, they need that sustainable growth.
Regarding AJ's comment on the similarity between current China's policy and Great Leap Forward, I think it's two utterly different realm.
We all agree that there's a limit on how much investment can be made into infrastructure. However, given China's tremendous size, both in physical land area and in population, we can easily expect investment to keep going for a few decades to come if China wants to catch up with the States. Moreover, if they follow the France and other European countries in infrastructure investment, there is an even higher demand. Thus, I think we all need to succumb to the fact that China is going to grow a for few more decades yet. Also, they are a world economic power already, if you ever read the news.
The "Great Leap Forward" made China the workshop of the world, 30 years later China needs to shift there economy away from growth driven by investment and exporting. China needs to fundamentally shift how the average Chinese citizen saves and spends there money so they can create self sustaining growth via a growth of consumption within there boarders. It will be interesting to what societal changes occur over the next decade to drive this change.
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