Chinese Premier Web Jibao is urging more aggressive measures to slow China’s white hot economic growth.
The state-run Xinhua news agency reports that the country has dropped its 2012 growth targets to 7.5 percent from 8 percent in March, in the face of a persistent slump in the United States and spreading debt woes in the EU:
“Wen said attention should be paid to improving structural tax reduction measures and resolving structural problems between credit supply and demand, and to make government policies more targeted, forward-looking and effective …
Dragged down by lackluster external demand and government efforts to cool inflation, China’s GDP growth slowed to an almost three-year low of 8.1 percent in the first quarter. Key economic indicators released lately showed further downward risks.
To buoy the economy, China has adopted a string of pro-growth measures, including lowering banks’ reserve ratio to boost lending, subsidizing energy-saving household electrical appliances and speeding up approval for major construction projects.
In its latest move, the central bank cut the benchmark interest rate two times in a month, in a bid to inject liquidity into the market.”
Bloomberg reports that the continuing crisis in Europe will continue to influence Chinese economic policy, with big announcements expected from IMF chief Christine Lagarde next week:
“The International Monetary Fund next week will cut its world-growth estimate this year, with Managing Director Christine Lagarde warning the outlook has ‘regrettably become more worrisome.’
‘The big downside risks to economic growth increase the pressure for monetary easing,’ economists Peng Wensheng and Zhao Yang from Beijing-based China International Capital Corp. said in a July 6 note. ‘Based on the recent developments in the global economy, we believe major central banks will take more conventional and unconventional measures in coming months to loosen monetary conditions and encourage bank lending.'”
What do you think? Is China set for a US-style collapse, or will it be the shining light in troubled economic times?
Read more on China, France, America and the world beyond in the Summer 2012 edition of Carnet Atlantique!