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Economic Slowdown Challenges China’s Leadership

After decades of double digit growth, the World Bank lowered China’s economic growth in 2012 to 8.2 percent. While the rate is higher than the government target of 7.5 percent, it is one percent lower than the 2011 figure.

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Recent economic data from China indicate that exports, real estate and investment, traditionally the bulk of China’s growth, have slowed down considerably, putting pressure on the country to come up with ways to steer its economy toward more sustainable growth levels.

After decades of double digit growth, the World Bank lowered China’s economic growth in 2012 to 8.2 percent. While the rate is higher than the government target of 7.5 percent, it is one percent lower than the 2011 figure.

“This kind of slowdown in China is not really a bad thing,” says Andrew Batson, research director at economic consultancy GK Dragonomics in Beijing. “It [the slowdown] is mainly a consequence of the success China has had in developing its economy so far,” he adds.

“What is complicating the picture in the short term,” Batson says, “is that China is also going through a cyclical downturn.”

 

April’s statistics showed that China’s many economic indicators were lower than what economists had expected. Sluggish American and European demand for exports, combined with a substantial cooling of the Chinese real estate sector, weighed on industrial production, investment and exports.

The World Bank has warned of the risk of a slump.  It has advised policymakers in Beijing on how to “sustain growth through a soft landing,” and how to shift the economy from dependency on exports to one driven by domestic demand.

via Economic Slowdown Challenge to China’s Leadership.

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