China’s manufacturing sector has contracted for the fifth
straight month. This contraction is even more worrisome because there is
typically a solid peak after the Chinese New Year. Chen Xingdong – Chief China
economist at BNP Paribas in Beijing – said “The old growth is losing steam,”
this in response to weak investment, industrial production and export numbers
in the first two months. China is
expected to have to take steps to really boost growth in order to meet their
2014 GDP target of “about” 7.5%. Beijing is expected to use policy measures to
stabilize growth, options including entry barriers for private investment,
targeted spending on subways, air-cleaning and public housing and guiding
lending rates lower.
3 comments:
I am confused by the possible resolutions to China's slowing economy. The Hong Kong based Chief China economist is quoted saying that "likely options include lowering barriers for private investment." The article also mentions that the contraction of China's economy will result "in a more gradual implementation of the sweeping market opening." China is going to encourage private investment but not open its markets?
I think that they're referring to domestic actions that would be taken. I don't believe that they're ruling out opening markets. What confuses is me is that the title is about a failing Manufacturing Sector, but that isn't explained in the article! It was only a matter of time before cheap labor moved from China to other countries. I think it will be interesting to see how their post-industrial economy takes form. I fear that this will destabilize the country. But again, this article didn't even talk about the manufacturing sector or give any statistics. So for me, this is merely speculation.
Isn't rising income a main reason why manufacturing sector is declining and many manufacturing factories are moving slowly to less developed countries where labor costs are much lower like Cambodia, Indonesia etc.
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