Global Economic Recovery Threatened by China’s Slow Output
China; one of the world’s economic leaders experienced weak economic growth from the time the world economic crisis was experienced. This caused worries in today’s global economic recovery.
China has shifted its focus to a consumer spending economy from export and investment led growth. “China’s economic decline comprises one of the dangerous cocktail of risks. It serves as an obstacle from recovery starting 2008 financial crisis.
On the most current statistics, exports from China fell to 11.2% since January this year. Its retail sales from January to February slightly grew to 10.2%. This data is lower than what analysts expect which should be 10.9% increase.
“The combination of slow industrial output as well as the retail spending creates a worrying picture for everyone”, Zhou Xiaochuian; Commerzbank economist said.
However, the People’s Bank of China; Zhou Xiaochuan is more optimistic when he said; “the country is expected to achieve 6.5% GDP growth on the coming 5 years to come, even without doing any measures to improve its economy”. He further stated that extreme monetary policy motivation is not needed to accomplish the target. All that is required is a discreet monetary policy.
But Mr. Osborne wrote on UK’s Sun this Sunday that there are signs where hopes of a strong global recovery have already evaporated. These are the interest rate changes, lowered oil prices and the Middle East’s political instability.
In 2015, China’s economy grew by 6.9%. However, this is still lower compared to 2014 which is 7.3% growth. The country’s growth drives the world’s economy and the slow growth has caused worries among investors all over the world.
According to the International Monetary fund, the economy of China is estimated to escalate by 6.3% this year and 6% next year. Beijing on the other hand set a goal to have at least 7% economic growth.
“Slow economic growth is okay as long as the country can still create enough jobs for everyone”, Li Kequiang; Chinese Premier stated. Though Beijing does not admit that the data have been inflated, observers still believe that there is actually weaker numbers behind the official data presented.
For the last 2 years, China’s economy slowed down painfully. And this happened after the country enjoyed rapid growth for many years. This is the result of the central governments wished to move towards a consumption and service economy instead of an economy driven by investment and exports. And the transition process has been such a challenge for the country.