China’s Economy Expands by 9 Percent
Oct. 20 – China’s economy expanded by 9.9 percent in the first three quarters of this year, reports the National Bureau of Statistics, marking the first time in five years that China’s quarterly GDP growth fell below 10 percent.
Bloomberg and the New York Times report that the economy only expanded by 9 percent. The drop is attributed to decreasing exports, a slowing real estate market and restrictions implemented the Olympics that forced many factories in Beijing to temporarily close.
In September, the consumer price index decreased to 4.6 percent compared to last month’s 4.9 percent. Fixed assets investment reached RMB11.6 trillion, an increase of 27 percent over the same period last year.
On the other hand, retail sales climbed to 23.2 percent in September compared to last year’s figures; to finish at the fastest pace in at least nine years.
For the first nine months of the year, urban disposable incomes climbed by 14.7 percent to RMB11,865 yuan while rural cash incomes amounted RMB3,971 yuan, an increase of 19.6 percent.
In a statement made by Premier Wen Jiabao at the end of an executive meeting, he said that the turmoil and economic instability will have a “gradual” effect on the country, reports China Daily.
China announced that it will be implementing tax cuts for exporters of textiles and electric machinery and increase infrastructure investment, in addition to the central bank possibly cutting interest rates for the third time.
The government has also reduced regulated interest rates, restrictions on bank lending as well as taxes on stock and real estate transactions. According to Channelnewsasia, analysts expect China to speed up infrastructure projects around the country to stimulate the economy in a downturn, and go ahead ahead with plans to increase domestic consumption.
Elsewhere in Asia, Singapore became the first Asian economy to report a technical recession, when it lowered the city-state’s full-year growth forecast to 3 percent. A technical recession is defined as two consecutive quarters of contraction in economic output.
In addition, Japan’s economy shrank by 3 percent during the second quarter. The Bank of Japan has been forced to maintain interest rates at 0.5 percent, the lowest among the world’s major economies.
This month, the International Monetary Fund (IMF) predicted that China’s economy may grow by 9.3 percent next year compared to the United State’s 0.1 percent, the EU’s 0.2 percent and Japan’s 0.5 percent.
“In the past China has been successful in responding quite quickly to increase spending, particularly on infrastructure, to offset the decline in export growth,” Charles Collyns, the IMF’s deputy director of research, told the New York Times.
“We expect the Chinese government to continue to loosen policies on the back of fast-slowing activity growth and dissipating inflationary pressures,” added Hong Liang, an economist in the Beijing office of Goldman Sachs.
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