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People's Daily Online>>Opinion

China's GDP growth slowdown likely to continue

By Zheng Jin (People's Daily)

15:57, October 21, 2011

Edited and Translated by People's Daily Online

The National Bureau of Statistics of China recently declared that the year-on-year GDP growth rate of the third quarter of 2011 had decreased to 9.1 percent. Compared to 9.7 percent and 9.5 percent growth rates recorded in the first and second quarters, respectively, China's economic growth rate has declined for three successive months.

Liu Yuhui, director of the China Economic Evaluation Center under the Institute of Finance and Banking under the Chinese Academy of Social Sciences, predicted that the decline of the GDP growth rate will certainly continue, and the GDP growth rate of the fourth quarter of 2011 will decline to between 8 and 9 percent.

“The active cause of the decline is that the Chinese central government has realized that it is too expensive and unsustainable to boost economic development only with investment from the government,” Liu said.

Liu said that economic problems caused by public investment from the Chinese government, such as overcapacity, redundant construction and low efficiency, have been absorbed by China's abnormally high export growth in the past. Within the context of globalization, the consumption bubble created by the West has to a large extent, helped eliminate these problems. However, during this U.S. and European debt crisis, such negative factors are appearing again.

Regarding the passive cause, Liu said that the investment impulses of various places have been restrained by the decline of the income from selling the land, and therefore, while the bank is fully tightening the credits and loans, the local governments have to slow down their investing steps due to the lack of funds.

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