China Q2 growth slows to GFC levels
The Chinese economy logged 7.6% of growth in the second quarter, falling beneath the 8% threshold for the first time in three years, and hitting its lowest level since the first quarter of 2009, when the global financial crisis was still raging.
Data released by China’s National Bureau of Statistics on Friday also indicated first quarter was slightly rosier, at 8.1%, while first half growth was 7.8%, pushing China’s GDP up to 22.71 trillion yuan ($3.56 trillion).
Flagging Q2 growth lends succour to widespread concerns over a possible hard landing for the Chinese economy, with the eurozone continuing to flounder in its efforts to resolve the sovereign debt crisis, and the US economy still in a state of convalescence.
Economic experts continue to tout the same prescription for boosting China’s economic vigour – a reduction in reliance upon capital investment and exports and increased domestic consumption.
Leo Abruzzese of the Economist Intelligence Unit says that China needs to engage in “a little less saving and a little more spending” and that “consumers in China need to start consuming more,” as China has already become a middle-class country. Derek Scissors of the Heritage Foundation believes that China can contribute more to world growth by shifting away from investment towards consumption.
Experts also expect the Chinese government to introduce further fiscal stimulus measures to prop up flagging growth, with Sebastian Mallaby of the Center of Geoeconomic Studies saying that “China should lead in this respect,” as a country which is strong enough fiscally to deliver such policies.