http://www.wsj.com/articles/china-industrial-production-growth-lower-than-expected-1442125441
According to reports, Beijing is having problems of reaching their growth target of 7%. This is a major problem for China due to the fact that Beijing is going to require more help from the government to stimulate activity. Some problem areas that are known are factory production and fixed-assets. China's industrial production fell below the forecasted median percentage by .05% which is a big deal for them. Production all over China did not hit their expectations but, retail sales were increasing and accelerating better than expected. A plan China has to increase growth is to cut required bank reserves and pressure local government officials to accelerate infrastructure spending. Even though this has not worked well in the past because China has already done five interest rate cuts and multiple reductions in bank reserves. This is the slowest the Chinese economy has boosted in 25 years. China is hoping to see the 7% growth in the last three months but the key to get there is to have a strong 3rd quarter.
1 comment:
I found an interesting article that thought that the "new normal" for China would be an economy driven by consumption rather than infrastructure. If you look at China over the course of its incredible economic boom, its extremely evident that this was mostly led by infrastructure advancement. Knowing this its not surprising that this finally slowed down since there is only so much you can build before you've built it all. I think this new consumption based economy will be much more sustainable and long term.
Post a Comment