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An end to the era of double-digit growth

By Ed Zhang  (China Daily)

13:38, September 28, 2012

There was a time when nobody questioned China's double-digit growth, not even in the wake of the global financial crisis in 2008.

But at a recent roundtable of economists and business commentators sponsored by the Shanghai University of Economics and Finance, that era appeared to be over as serious questions were raised about how fast the Chinese economy can continue to grow and for how long.

Attendees argued that a period of transition from export-led to consumer-led growth has begun involving an inevitable economic slowdown, and said the most effective measure the government could take would be to launch more government-led capital investment projects.

Ye Tan, a leading business commentator, described the environment for Chinese companies as being like "frogs trying to swim in warm water" - they face a long and painful death.

They are not making profits and have little idea about their future. The only thing they can do is to offer increasingly lower prices in an attempt to compete for limited orders, she added.

There is a growing cash flow problem among many companies, which are not making enough profit to pay back debts or reinvest, she said. Most of these companies used to engage in the mass production of export products but are now facing dwindling orders and a rising renminbi.

"I say China is bidding farewell to double-digit growth, because many industries will no longer be able to double their size in the course of a decade," she said.

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