China’s economy grew by 7.4 per cent in Q1 compared to the previous year, figures show. Though the country is experiencing a slowdown, it’s still beating expectations.
China’s growth rate has been the envy of developed economies around the world for years, but signs have emerged that it might be slowing down.
New figures show that the nation’s economy surpassed expectations and grew by 7.4 per cent year-on-year in the first quarter of the year. This is much higher than many Western economies – after all, the EY ITEM Club has forecast the UK will grow by 2.9 per cent this year, a rate the ITEM Club believes will not be matched until at least 2017.
However, it still represents a slowdown by Chinese standards, given that the country posted 7.7 per cent annual growth in the last quarter of 2013.
China’s growth target for the year as a whole is 7.5 per cent, a climbdown from previous years. But the government has been saying that it is happy with a slightly slower rate of expansion if this means that growth is of better quality and more sustainable.
Major economic reforms are afoot that are intended to create new jobs with better rates of pay, leading to higher living standards. In turn, this will support the country’s rapidly increasing domestic consumption, which it is hoped will make China less reliant on export orders from foreign buyers.
Even so, concerns have centred around just how effective current growth measures have been. As the Financial Times reports, sluggish trade, slowing real estate sales and even weak manufacturing data – the powerhouse of Chinese growth for much of the past two decades – have all had an effect.
A small round of stimulus measures were introduced recently, such as tax cuts for small businesses and extra spending on railways. Though there are no plans to follow these up as yet, commentators are still looking for signs that the government is doing more to prop up growth.
It may be that after years of growth it was inevitable China would begin to see signs of a slowdown. But whether the economy is faltering or not, it remains the second-largest in the world. As the government takes steps to put China on a firmer footing with quality growth for the future, the effects will be felt around the world.
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