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Staying on Target (2)

(Beijing Review)

14:03, August 22, 2012

Why so slow?

Compared with the strong economic growth of the past three decades, especially the robust recovery after the global financial crisis in 2008, the Chinese economic growth has seen a downturn since the fourth quarter of 2010. If the economy experiences a hard landing, it would send shockwaves throughout the world. In spite of a series of measures by the Chinese Government to stabilize growth, economic figures for the second quarter still showed no signs of a pickup.

The sluggish economy is the result of a simultaneous slowdown of both external and domestic demand, said a report by the Bank of Communications.

Europe and the United States are China's major export destinations. However, due to the sovereign debt crisis, demand from these two major markets continues waning. Figures from the Ministry of Industry and Information Technology showed that in the first five months of this year, textile exports to the EU dropped by 11.2 percent.

Some policies have also weakened the internal impetus of the Chinese economy. For example, growth of investment in real estate development has been in decline due to tight control, sluggish sales and reduced source of capital. Moreover, because of the government-led economic restructuring—curbing investment in industries of high energy consumption, high pollution and surplus production capacity—industrial investment is also declining.

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