The economic growth of China slumped to a 6-year low after retail sales and manufacturing itself cooled at the beginning of the year, stepping up pressure for Beijing to stay on track as the second largest economy of the globe. It’s recorded that the economic growth went down to 7% from the previous quarter. Since the world’s financial crisis in 2009, when the growth reached the 6.1%, that is the weakest performance. It is important to mention that much of that decline has been self-imposed – Chinese communist leaders try to push the country to amore sustainable economic growth, which will be driven by domestic consumption. However, an unexpected downturn that has been observed during the last year has also caused fears of social tensions and job losses.
Economists say that China’s economy is getting slower at the rate that the government representatives find uncomfortable. Since November the interest rates have been cut twice by Beijing, who also launched a range of special measures in order to help not only exporters, but also the other industries. However, the economists claimed that the country still depends on the spending of the state-led construction as well as the other investment for almost a half its economic expansion. Sheng Laiyun, who takes the spokesman position for the National Bureau of Statistics, says that the country is still relying on the traditional economic growth engine. In other words, China is in a so-called transition between the new and the old models of growth.
China’s top economic leader, Premier Li Keqiang, warned that the country is faced right now with the increased “downward pressure”.
Li told economists that the country is in need of a range of regulatory changes in order to improve efficiency, nurture new industries as well as provide new jobs. Chinese leaders state that their priority nowadays is to make China’s economy more productive and efficient. However, unpredictably weak construction and trade – industries that support a great number of jobs – have prompted expectations Beijing will cut interest rates once again in order to support growth.
Back to the beginning of the year, the very first quarter is considered the weakest for the country since the world’s financial crisis, when growth went down to the point of 6.1% in 2009.
According to the government spokesman, it is not clear what share of China’s economic growth derived from investments and how much from consumptions. But Sheng also said it should be close to the previous data, when the contribution of consumption to the country’s economic growth reached about half for the very first time, rising to 51.2%.
The most recent data showed that the representatives of the International Monetary Fund cut the Fund’s outlook for the country to 6.8% from 7.1%. Soon after the World Bank trimmed its forecast for the country’s growth to 7% this year from 7.1%.