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China news tagged with: economic growth (324)

• Stephanie Flanders: Optimism About China’s Economy

  

  Stephanie Flanders, the BBC’s economics editor writes on her blog:

  The Chinese authorities have impressed the world before with their response to economic crises - for example during the Asian financial crises of 1997-8. This crisis is of a different order. But so has been the response.

  As a share of the US economy, China’s fiscal stimulus measures this year are larger even than America’s. While the loosening of credit conditions is greater than any that O’Neill has ever seen.

  All this policy seems to be having an effect. He’s just raised Goldman Sachs’ forecast for Chinese growth this year from 6% to more than 8%, and next year’s from 9% growth to nearly 11%.

  This optimism gets support from stories on the ground. Qu Hongbin and Sun Junwei, of HSBC, just returned from a tour of three big cities in inland provinces, which were never as dependent on exports as the coast.

  They say that firms there are already benefiting from all the new infrastructure projects that the government is putting on stream. And consumer spending is holding up as well, growing at annual rates of close to 20%.

  » Read more
  • April 29, 2009 10:39 AM

• Hope and Caution on Chinese Economy

  

  The New York Times reports on conflicting messages from two experts about China’s economic prospects, and the difficulties of predicting the end to the global financial crisis:

  The comments by a top official of China’s central bank and the chief economist of a leading research organization illustrated how hard it is for economists anywhere to reach a consensus on whether China and other leading economies have now put the worst behind them.

  A string of recent data has made most observers reasonably confident that the pace of decline has at least slowed in the United States and that China’s economy is likely to pick up again. China is one of the world’s few large economies to avoid outright recession this year, although growth will be well below the double-digit rates before the global financial crisis began.

  Yi Gang, a vice governor of the People’s Bank of China, said in Beijing that a two-year stimulus package of 4 trillion yuan, or $585 billion that was announced in November had helped restore confidence and support a growth rate close to the official target of 8 percent this year.

  But cautioning that China’s recovery was unlikely to be steady and quick, Fan Jianping, chief economist with the State Information Center, cited the impact of the global financial crisis and structural problems in China’s domestic economy, Reuters reported.

  » Read more
  • April 22, 2009 11:56 AM

• Will India Overtake China’s Growth Rate?

  

  From Statesman:

  China today said its economy in first three months of 2009 grew by 6.1 per cent, its lowest rate in over a decade, thus raising apprehensions about the communist nation losing its status as the world’s fastest growing economy to India.

  While the official figures for growth in India’s gross domestic product during the first three months of 2009 is not available as yet, the country’s economy is estimated to have grown by 7.1 per cent in the fiscal ended 31 March.

  Given a steeper decline than India in China’s GDP growth rate, which stood at 13 per cent in 2007 and fell to nine per cent in 2008, some experts opined that it would be interesting to watch which of the two economies grow faster going ahead.

  Asked if China’s GDP growth rate could fall below that of India’s, Standard & Poor’s chief economist for Asia Pacific, Mr Subir Gokarn said over telephone that it was “quite likely in one particular quarter”, but on a yearly basis it might not be the case at least this year.

  » Read more
  • April 16, 2009 9:34 PM

• The Global Recession in China: There’s Plenty of Blame for All

  

  China’s economy has slowed its breakneck growth under the weight of the global recession.  Now the Chinese people’s resentment seems split between the United States and their own government.   Melinda Liu writes for Newsweek:

  The latest recession-fueled outburst of America-bashing in China might worry Washington, but it’s even scarier to the rulers in Beijing. Millions of ordinary Chinese are in trouble, and they’re asking why their government is continuing to prop up the United States, the country that practically everyone blames for creating the global economic crisis. Never mind what would happen to the roughly $2 trillion in Chinese foreign reserves that are invested in U.S. securities if Beijing suddenly tried to cut America loose.

  [...]the anti-U.S. hard-liners—”economic nationalists,” as they’re known in China—are far from satisfied. Wang Xiaodong, a prominent member of the movement, scoffs at the idea of replacing the dollar with a new IMF-backed reserve currency. “Isn’t the IMF also under the control of the United States?” he asks, with a conspiratorial grin. He says Beijing should simply quit buying U.S. T-bills and invest the money at home instead, building up China’s own infrastructure, defense forces and social services. Wang is one of five authors of a new book, “Unhappy China,” which sold 100,000 copies in just 11 days after its release in mid-March. The book takes Beijing to task not only for coddling the Americans but also for neglecting national defense. Wang and his cohorts say China needs to beef up its Navy if it continues buying up natural resources everywhere from Australia to Africa. “All those commercial contracts mean nothing unless we have aircraft carriers to back them up,” says Wang, “That’s why so many younger Chinese are asking for a strong Navy.”

  » Read more
  • March 29, 2009 12:49 AM

• Andrew J. Nathan: When China is No. 1

  

  For McKinsey and Company’s What Matters site, Andrew Nathan argues that global economic dominance may not be enough for China:

  It is true China has achieved decades of breathtaking growth. It now ranks at or near the top in terms of foreign-exchange holdings, trade volume, and inflows of foreign direct investment. But even at number four, China accounts for only 6 percent of the global economy, equal to about two Californias. On a per capita basis, China sinks further. It is 49th in foreign-exchange reserves per person. It is 92nd in exports plus imports per person, and 106th in GDP per person. Lacking a reserve currency, like the US dollar, China cannot set the parameters for commodity prices, inflation, interest rates, or stock prices around the world. Nor can it call the shots in the World Bank or International Monetary Fund.

  Indeed, given its size, China’s most important contribution to the rest of the world now and into the future will be to take care of itself. Its ability to satisfy most of its own needs—in energy, grain, and cotton—is crucial to world price stability. The gradual growth of its economy helps the rest of the world remain stable. Economic growth helps keep China politically at peace, avoiding a breakdown that could saddle the rest of the world with refugees, public health problems, and transborder crime problems spilling out of China into neighboring countries. In a sense, then, big as it is, China remains a supporting player on the global economic stage.

  China’s ascension could be derailed by domestic instability or global economic shocks, but assuming that it does become number one, what will it mean for China’s place in the world?

  » Read more
  • March 26, 2009 12:34 PM

• China’s Stimulus Spending to Help Growth Reach Target

  

  China is optimistic that stimulus spending will help the economy grow by 1.9%, Bloomberg reports:

  Vice Premier Li Keqiang reaffirmed China’s goal of 8 percent growth at today’s forum, saying some industries “have seen signs of recovery.”

  China is targeting expansion in 2009 even as economies from the U.S. to Japan contract. The nation’s economy is showing “early signs” of stabilizing as government-backed investment counters a slump in exports, the World Bank said March 18.

  Investment in China rose 26.5 percent in the first two months of 2009 and bank loans quadrupled in February, indications the government’s 4 trillion yuan ($585 billion) stimulus plan is starting to feed into the economy.

  » Read more
  • March 22, 2009 10:46 AM

• Video: Naked China

  

  It has been five months since the 2008 Beijing Olympics. China considered the Games as a symbol of the rising of a great nation. Over five nights leading to the opening ceremony, News and multimedia website Current.com came up with a series of documentaries with five parts: Busting Out; The Good, the Bad and the Ugly; Out of Control; Fighting for Freedom; Let the Party Begin. These video series, anchored by Laura Ling, a Current journalist, summarize Current’s former news videos to explore China’s economic growth, how China prepared for the Games, social ills in China’s society - sex workers, freedom of religion and the press, and the transition of China’s culture, via Current.com:

  Naked China: Busting Out
  

  Naked China: The Good, the Bad and the Ugly
  

  Naked China: Out of Control
  

  Naked China: Fighting for Freedom
  

  Naked China: Let the Party Begin
  

  » Read more
  • January 28, 2009 3:09 PM

• China’s Economy Slows Sharply As Global Crisis Hits

  

  From AFP:

  China’s economy slowed dramatically at the end of 2008 as the full force of the global crisis hit home, dragging growth to a seven-year low, official data showed Thursday.

  The world’s third-largest economy expanded by just 6.8 percent in the final quarter, pulling the full-year growth figure down to 9.0 percent, the National Bureau of Statistics said.

  Coming after 13.0 percent growth in 2007, the figures offered the most complete picture yet of just how severely the world crisis has hit China’s export-dependent economy.

  “The international financial crisis is deepening and spreading with a continuing negative impact on the domestic economy,” Ma Jiantang, the head of the National Bureau of Statistics, told reporters in Beijing.

  » Read more
  • January 21, 2009 10:13 PM

• China Revises 2007 GDP Growth to 13%

  

  From Wall Street Journal:

  China’s statistics bureau said the nation’s economy grew even faster in 2007 than previously estimated, a revision that also made the country the world’s third-largest national economy in U.S. dollar terms, overtaking Germany.

  The National Bureau of Statistics Wednesday revised its estimate of the growth in annual gross domestic product, the total value of goods and services produced in an economy, to 13% in 2007, up from its last estimate of 11.9% and an initial estimate of 11.4%.

  The bureau is expected to release its initial figures for GDP in 2008 later this month, and the higher comparison base could lead to a faster-than-expected slowdown in growth. “It makes this year’s outlook even more challenging,” said Ben Simpfendorfer, economist at Royal Bank of Scotland.

  » Read more
  • January 14, 2009 5:29 AM

• China 2008: The Global Financial Crisis

  

  This next article in the CDT series on important issues facing China in 2008 focuses on China’s role in the global financial crisis.

  To give a deeper understanding of China’s up-and-coming role on the world stage, CDT looks at articles, issues, and policies over the last six months that contributed to the current state of the Chinese economy. While this is not a comprehensive timeline, it will give a basic analysis of China’s reaction to the financial crisis and its role within it.

  –
  After starting 2008 with a double-digit growth rate, substantial trade surpluses, and over a trillion dollars in foreign reserves, it took almost half the year before China fell victim to the global financial crisis. At first some believed China might be immune; however, as banks began to collapse in the United States and Europe, China quickly found itself drawn into the financial mess.

  When the U.S and Europe fell into the credit crisis earlier this year, they were forced to cut back on consumption, which fueled a massive decrease in demand for Chinese imports. China was already experiencing a economic downturn, and the lack in demand from abroad meant factory closures, resulting in high job losses all over China. Guangzhou, a major manufacturing town, lost tens of thousands of workers in 2008, forcing citizens to return to their home in the countryside. Dongguan, and the southern Pearl River Delta, also lost thousands of workers. Suddenly the great engine of China was slowing.

  At the same time, China also still seems poised to “rescue” the West. With $1.9 trillion in foreign reserves, a $29.3 billion trade surplus, and potentially undervalued yuan, China still seems to be one of the most influential players in the world - at least from a fiscal perspective. But China became leery. Having been burned by previous sour investments, the country is cautious in handling its $200 billion of sovereign wealth funds abroad. For example, many thought the China Investment Corporation (CIC) would use some of these funds to purchase an additional stake in Morgan Stanley earlier this year; however, Japanese bank Mitsubishi UFJ Financial Group ended up financing the investment. The West is asking China for help, but representatives from China continually answer that the best strategy for China is to focus on its own internal growth.

  The Chinese government is working on this in a variety of ways. In the beginning of 2008, the CIC invested money directly into Chinese banks, giving $20 billion to China Development Bank, and $47 to Agricultural Bank of China. The latter held $100 billion of bad loans and was the country’s fourth largest state-owned lender to have to be funded by the government. Then in mid-September, China’s Central Bank cut interest rates for the first time in six years; China wanted to keep inflation levels low, but it also needed to encourage lending. The Central Bank continued to cut rates throughout the remainder of the year. Just a few weeks later, the government introduced a series of tax cuts for new homeowners, lowering the property contract tax from three percent to one percent and decreasing the down payment on certain-sized homes. Perhaps the most well known “stimulus” for China was the $586 billion stimulus package unveiled in November; the package received plenty of speculation in terms of how much “good” it would do the real economy, but many find it difficult to argue with China’s desire to invest in infrastructure.

  But most recently, the Chinese government is hoping to change habits. Many Chinese take a certain amount of pride in thriftiness, and Beijing wants to encourage consumption. Consumer spending currently accounts for 38 percent of the China’s GDP, compared to somewhere like the United States where consumer spending is almost two-thirds of the country’s GDP. Part of the previously mentioned $586 billion stimulus package includes incentives for individuals to buy cellphones, furniture, washing machines and flat-screen TVs. And lastly, we can’t forget the ever-argued “manipulation” over the value of the yuan.

  Right now China says it needs to focus on keeping its economy growing. With the economic outlook looking much slower for 2009, China needs to address the increasing social unrest from rising unemployment, as well as its role in the turbulent global economy. China’s projected growth for 2009 lies anywhere from 5.5 to 9 percent, and it needs a minimum of 7 or 8 percent growth to provide jobs for the estimated 20 million people that annually enter its workforce.

  So what will China do? Most recently outgoing U.S. treasury secretary Henry Paulson met with officials in Beijing to discuss the global financial crisis. At the most recent convening, China’s Central Bank governor, Zhou Xiaochuan, blamed the financial crisis on “excessive consumption and high leverage” by Americans. Yet China holds over $585 billion in United States debt (along with Japan, Great Britain, and countless others), essentially helping to finance the ability of Americans to live beyond their means over the past decade.

  In the coming months, it is unclear how China will welcome the new Obama administration, and aside from several small comments, it is yet to be seen how the Obama administration will interact with China. Discussions have obviously begun, as China’s Central Bank governor, Zhou Xiaochuan, met with Mr. Paulson’s successor, Timothy Geithner, earlier this month. At a time where the financial landscape is changing daily, the United States, and the world, are looking at China for its reaction.

  Analysts around the world have given their perspective of China’s role in the current economic crisis. To learn more about China’s role within the crisis, here are some additional links:

  China 2008: La Repubblica’s Asia Chief Correspondent and Senior Global Columnist, Federico Rampini gave a lecture on the impact of the global economic crisis on US-China relations on November 10, 2008. His speech was followed by the remarks prepared by two discussants, and a Q&A session.

  Understanding the Global Financial Crisis: Blogger from The China Vortex discusses the importance, and difference, of home owernership in China and the US.

  Video: China Investment Corporation: An interview by CBS’s Lesley Stahl reveals deep insight into the workings of the the CIC by interviewing CIC President Gao Xiqing. Gao discusses the funds goals and how the rest of the world feels about the CIC.

  Obama’s New Deal and the fate of migrant workers: Overseas political commentator Liang Jing wrote this essay; translated by Dr. David Kelly.

  Book Review: Chinese Capitalism: A new analysis on China’s political and rural economy in the 1980s compared to the 1990s.

  Reflections on migrant workers and news on the recent social unrest in China

  » Read more
  • December 8, 2008 10:55 PM

• China 2008: Environmental Crisis

  

  This next article in the CDT series on important issues facing China in 2008 focuses on the Environment. See also previous posts on Nationalism, the Developing World, and the Global Financial Crisis.

  China’s environmental issues have increased in scale in 2008 as the country strives to maintain its economic growth and development. In particular, air pollution has worsened rapidly between 2007-2008 after a sharp rise in 2002. China’s total carbon emissions and greenhouse gas (GHG) emissions are estimated to have surpassed the United States, which has been the number one carbon emitter in the world. China’s increase in emissions is due to the burning of coal to generate the needed power for development. Air pollution is costing China alone $82 billion in economic losses this year. In addition to air pollution, China suffers from desertification, water pollution, soil erosion, indoor air pollution, and e-waste.

  In particular, air pollution, water pollution, and e-waste have sickened many and even claimed the lives of Chinese citizens. Besides the urban centers in China, according to the Chinese Environmental Aspect Bulletin, the rural areas are facing a major environmental crisis as well.

  How has the Chinese government responded to the gigantic environmental crisis that the country is facing? It has begun to invest in other energy sources in addition to coal. These energy sources include hydropower which requires building dams (such as the South Tibet dam), nuclear power, wind power, solar power, and even a more innovative solution such as burning straw. The government has also initiated large scale projects, such as forest rehabilitation, a ban on the use of plastic bags, reducing car traffic in Beijing and Shanghai, the construction of an eco-city in Dongtan, and rural environmental protection. Another recent innovative solution is the “smart grid” management of the electricity and information technology infrastructure.

  The efficacy of China’s environmental effort is largely in question. While some US research institutions, such as MIT and Yale, have produced optimistic reports about China’s environmental effort, some remain skeptical about Beijing’s reporting on pollution numbers. The building of dams is met by local people’s resistance due to its damage to the ecosystem. Forest reclamation might be too late for the relentlessly encroaching desert. The Dongtan eco-city project is now stalled. Smog returned to Beijing soon after the Olympics was over, and Isabel Hilton wrote in China Dialogue that China needs to clean up after the Olympics. Greenpeace China also produced a report on Beijing’s environment before and after the Olympics. Enforcement of the ban on the use plastic bags is a struggle. Worse yet, when faced with the global economic melt-down, China is retreating its environmental effort in order to keep up its economic growth for the reason of stabilizing the society.

  What is the attitude of Chinese citizens toward the country’s environmental crisis? The Ministry of Environmental Protection surveyed citizens’ satisfaction about the country’s environmental management. More Chinese value their environment over the economy according another report. Following the Xiamen PX protest last year, another protest against the building of a chemical plant was held.

  While the environmental law needs to be tightened and codified, environmental litigation is being carried out by environmental litigators, such as Zhang Jingjing. However, grassroots environmental protection remains a relatively small force in comparison to industries’ cooperation with the government. For example, Beijing offers companies cash incentives to curb the capital’s pollution. Eco-enterprises are seizing opportunities for green investments. Big Chinese companies are joining global climate groups in reducing energy consumption.

  Due to the global impact of China’s environmental crisis, Japan and the U.S. are pressing China as well as other developing countries, such as India, to have carbon emission caps. While some voices within China also propose that China needs to assume a primary role in tackling the country’s environmental problems, the official government response pointed to rich countries to do the cleanup, during recent global climate talks.

  » Read more
  • December 5, 2008 8:58 PM

• China To Shun West’s Finance Sector

  

  The New York Times is reporting China’s reluctance to invest in the foreign financial sector given the heavy losses on recent investments in Blackstone Group, Barclays and Morgan Stanley.

  Lou Jiwei, chairman and chief executive of the China Investment Corporation, gave the clearest reasons for future intentions. “Right now we do not have the courage to invest in financial institutions because we do not know what problems they may have,” said Mr. Lou at the Clinton Global Inititiave conference in Hong Kong.

  With the global financial markets plunging, many countries are looking to China for assistance, to which Mr. Lou responds, “If China can do a good job domestically, that is the best thing it can do for the world,” he said.

  Over the past few months, some Western analysts expected China to use their $1.9 trillion in foreign exchange reserves to rescue some U.S or European banks; however, financial leaders in Beijing, Hong Kong and Shanghai are less likely to buy more after recent losses. China Investment Corporation lost $2.46 billion, or 82 percent, of their investment in Blackstone Group earlier this year.

  Currently, the China Investment Corporation holds $200 billion; it was expected to invest this wealth overseas, but it has purchased large stakes to help banks in China instead.

  » Read more
  • December 3, 2008 3:54 PM

• China’s Economy, In Need Of Jump Start, Waits For Citizens’ Fists To Loosen

  

  The International Herald Tribune writes a feature on how the Chinese government may need to convince individuals to open their pockets up to spending. Many parts of Asia have high savings rates, but the Chinese “propensity to save is rooted in deep-seated memories of scarcity and a tattered social safety net that forces people to save up for education, retirement and medical costs”. The recent government stimulus package is helping to alleviate some of these concerns and encourage citizens to spend more to help boost their economy.

  As the nation’s export driven economy slows down over the next year, the government fears unemployment and social instability could threaten the hold of the Communist Party. Although the growth rate has only slowed to an estimated 9 percent, projects place the growth at 7.7 for 2009, and some as low as 5.5 percent. The Chinese economy needs an 8 percent growth rate to sustain job requirements for the estimated 20 million people that enter the workforce each year

  Now government analysts are looking to consumers, especially “the country’s hundreds of millions of high-saving peasants, to pick up much of the slack”. In a country where consumer spending makes up 35 percent of the G.D.P, down from 50 percent during the 1980s, it may be more difficult than the government assumes. To pick up this “slack” some western economists believe Chinese consumers would need to increase their spending by one third.

  The Chinese government’s recent $586 billion stimulus package gives incentive for homeowners to fill their places with furniture, help provide power to rural farmers, and subsidies for individuals to buy cellphones, washing machines and flat-screen televisions. The government also cut interest rates by more than a percent.

  Speaking with local countryman, Dang Fu, he explains that he saves two-thirds of his family’s $2,200 annual income. His wife Zhang Fengxia, does not use banks, saying it’s “better to keep money at home” and their biggest purchase was a tractor for $1,200 bought several years ago. The rest of their funds are set aside for retirement and potential medical costs. Compare Dang and his wife to Li Xiuqing, a secretary in a Beijing accounting firm. Li makes less than $600 a month, saves half and spends the rest on stylish clothing, meals and her cellphone. She teases her mother about her miserly ways, to which her mom responds “Old people just need one outfit,” she said, “You should save everything for your kids.”

  There is speculation that urban Chinese may have different habits than the rural Chinese.

  » Read more
  • December 2, 2008 11:36 PM

• APEC Economist: India and China Key

  

  The Associated Press is reiterating China and India’s role in the global economic downturn, citing a top Pacific Rim trade economist and the International Monetary Fund in the positive impact of China and India’s growth. The IMF claims that developing nations, including China and India, will account for “the world’s entire projected 2.2 percent overall growth next year.”

  The IMF estimates that the economy from rich nations will grow by a mere 0.1 percent while the developing world is expected to grow almost five percent. China and India have grown at near double digit rates respectively, and the two countries hold 40 percent of the world’s population. Although the growth rates in both countries are expected to slow, “the production drop [will] be far softer than [in] rich countries” because China and India have the world’s largest cash reserves.

  China and India are members of APEC, and at last week’s G-20 summit in Washington DC both expressed a demand for “greater say in world economic and political forums.” The summit saw G-20 presidents agree to “take whatever action necessary to stabilize the financial system.”

  » Read more
  • November 18, 2008 8:50 PM

• World Looks At China During Current Market Crisis

  

  With George Bush calling a 20 country summit this November to discuss the current credit crisis, the rest of the world questions what role China will play. The Economic Times reports:

  China can’t save the world from a financial meltdown, but it’s strong economic growth, even in a time of crisis, can help to alleviate the trouble for the rest of the world. While it might be “impossible” for China to help Europe, Japan or the US, China can still be a stabilizing factor in Asia.

  At the upcoming Asia-Europe summit (ASEM) in Beijing this October, China will host 40 European and Asian governments. While China’s growth is declining, it is still hovering around 9.9 percent, and on Sunday, the Chinese State Council set a new economic strategy: away from “rapid growth and inflation control” and instead towards “stable and rapid economic development.”

  

  Jose Barroso and Hu Jintao shake hands before the 2008 ASEM summit

  US secretary Henry Paulson sited China as a large factor contributing to the world’s economic growth, and said while “China is feeling the current global financial stress as well… its economy is expected to continue to be an important engine for global growth during this period.”

  Bloomberg reports countries like Thailand, South Korea, and the Philippines will all be asking for some sort of assistance in the unstable global financial environment at the upcoming ASEM meeting in Beijing on October 24th.

  China will be asked to become more involved in the global financial crisis at ASEM this week. The meeting will include China’s Hu Jintao, France’s Nicolas Sarkozy and more than 40 other heads of state.

  The countries will be looking for China, who holds $1.9 trillion in currency reserves, to use this leverage to assist other struggling nations.

  With the current financial crisis underway, this year’s ASEM meeting “has the potential this time to achieve something really important,’’ says Phil Deans, a professor of international affairs at Temple University in Tokyo. “If you can get the Asian and European economies singing from the same page the Americans will have to follow.”

  Observers believe China will be forced to consider proposals from neighboring Asian countries seriously, because a financially destabilized region will have “more of an impact on China” than the crisis in Europe and the United States.

  On November 15th, George Bush will host 20 countries, including China, at a summit in Washington D.C.

  » Read more
  • October 23, 2008 10:26 PM

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