07/15/2013, 00.00
CHINA
Send to a friend

China’s economy slows down to 7.5%, lowest in 20 years

by Wang Zhicheng
The National Bureau of Statistics says that the indices "are within the preset objectives." But economists and institutions are pushing for a change in the economic model, based on the exploitation of cheap labor, and on exports. The real estate bubble reaches bursting point.

Beijing (AsiaNews) - Chinese growth in the April-June quarter of 7.5% is the lowest figure for over 20 years. In the previous quarter (January-March) the figure was 7.7, indicating an increasingly consistent slowing down, although analysts say that the reduction was predictable. The data was published today by the National Bureau of Statistics.

The reasons for the decline can be attributed primarily to the decrease in demand for Chinese products in the greatly suffering U.S. and European economies, which reduced imports. The second reason lies in Premier Li Keqiang's block on bank loans and new financial incentives. In 2008-2009, in the middle of the global economic crisis, China launched a stimulus package of 4 trillion yuan (500 billion euro), creating high inflation and bad loans for banks at risk of insolvency.

A spokesperson for the Bureau of Statistics states that "the major indicators are within our targeted range but we face a complex situation".

In fact, the leadership set growth at 7.5%, for this year but according to many analysts even this target will be difficult to reach without injecting new loans.

Li Keqiang pointed out several times that it is time for the China to rebalance the economy, so far based on huge investments - often unproductive - and export of products at competitive prices, thanks to the low labor costs.

Many economic institutions, including the World Bank - have constantly urged China to build its internal market potential to protect itself from a reduction in exports, to increase wages to boost domestic consumption, curb aid to state-owned enterprises - a source of corruption among members of the Party - and encourage private industry.

The rain of loans from state-owned enterprises (in the first three months of 2013 to the tune of  7.5 trillion yuan) is once again creating a recovery in the construction and an increase in house prices. However it is generating a real estate bubble.  Already in China, at least 50% of new homes built since 2007 are empty and without potential buyers.

It is estimated that all the buildings under construction can accommodate at least 200 million people, the equivalent to the increase of the urban population over the next 15 years.

 

Send to a friend
Printable version
CLOSE X
See also
Beijing, housing market collapses: down 50% in one year
16/04/2011
Property speculation leaves 64.5 million vacant homes in China
09/07/2010
Real estate bubble close to bursting
06/07/2010
Chinese growth slowing down again in May, Wen Jiabao voices concerns
01/06/2010
Record growth (+11.9 per cent), but many fear bubble and unemployment
15/04/2010