Will China's economy decline?

16:39, July 12, 2011      

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The Chinese economy is in the process of transforming from the strong rebound after the implementation of the package plan to independent stable growth, and the Chinese economy will not experience a "hard landing," said Wang Yiming, deputy president of the Academy of Macroeconomic Research under the National Development and Reform Committee.

"The Chinese economy maintained a steady and relatively fast growth in 2011 and the economic operation situation is good in general," Wang said. “China's investments maintained relatively fast growth, consumption growth showed a slight decline but still remains high, and industrial production continues to maintain relatively fast growth. The effect of implementing the steady monetary policy has been gradually shown.

"Although the price level is still high, the month-to-month growth has become less pronounced," Wang said.

On the whole, Wang said the Chinese economy continues to develop in the expected direction of macroeconomic regulation and control.

"Meanwhile, we should also clearly see that China's economic development is still facing an extremely complex domestic and foreign environment," Wang said.

Wang said there are many unstable and uncertain factors. Therefore, macroeconomic regulation and control has become more difficult.

"We should strengthen the awareness of being vigilant against dangers in times of peace and clearly see favorable conditions and positive factors in various aspects to reaffirm our confidence and make efforts to achieve economic and social development goals throughout the year," Wang said.

Slowdown of Chinese economic growth has its rationality

Economic growth to not sharply slow down

Although China's GDP growth reached nearly 10 percent in the first quarter of 2011, signs of a slowdown in economic growth have indeed appeared in China. The number of new projects in the first few months of 2011 has been reduced significantly and the industrial growth also declined in the recent two months. Do these phenomena show that the Chinese economy will experience decline? Wang made a cause analysis regarding this problem.

First, the total investment growth of new projects in 2011 showed significant decline along with the end of the 4-trillion-yuan investment plan. The pulling function of investments to economic growth has become weak. This is a normal phenomenon of the transformation from policy stimulus to the independent stable growth. Meanwhile, it also required China to accelerate the cultivation of investment enthusiasm toward the subject of market to strengthen the endogenous power of economic growth.

Second, the consumption growth is slowing down under the influence of residents' income and the end of some policies designed to stimulate consumption. China should take measures to improve the urban and rural incomes to strengthen urban and rural residents’ willingness to consume.

Third, the growth of developed economies obviously slowed down in 2011. The unemployment rate remains high. The European sovereign debt crisis is spreading, and international commodity prices are fluctuating widely. Inflationary pressures of emerging markets continue to increase, and the unstable and uncertain factors of the global economic recovery have increased, which also have corresponding impact on China's exports.

"A moderate slowdown in economic growth is reasonable. It will help ease inflationary pressure, promote economic restructuring and increase the quality and efficiency of economic growth. We should make full use of the changes in the external environment, accelerate industrial restructuring and economic upgrades, and increase the proportion of high value-added links in an industry value chain so as to promote the transformation of the economic development pattern. Based on current trends, China's economic growth will not slow sharply," Wang said.
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