http://money.cnn.com/2012/04/12/news/economy/china-gdp/index.htm?iid=SF_E_River
The National Bureau of Statistics said Friday that the Chinese economy grew at a pace of 8.1% for the first quarter of this year. This rate was a decrease from last quarter, 8.9%. This is considered low for China because they have been around 10% growth for the past three decades. Economist fear that a slow down in China could affect the global economic growth. Chinese officials have increased the money supply and new loans to boost economic growth. One of the sectors that has slowed down is the manufacturing sector which may be a cause of a slow growth rate in the United States and the "shrinking eurozone economy."
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It is an important reminder in this article that countries do have a devastating effect on the global economic growth. Just like the sluggish growth in the United States has affected China’s economy. A beneficial statement in the article was that China has increased their money supply and now new loans have picked up. This is because when the money supply increases it causes the interest rates to be lower, which encourages consumers to borrow money and spend more money in the economy. This type of solution is also known as an expansionary monetary policy, which boosts economic activity and growth and decreases unemployment. This policy seems like a good solution, however, this policy wouldn’t control inflation with the increase in the money supply. Ideally China would want an expansionary policy without inflation, which would be a very cautious but productive route for China to reach their expected growth rate.
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