11-08-2013, 02:16 PM
An article on China economic...
China’s new inflation constraint explains plateau
China’s economic-growth rate slowed in the second quarter of this year to 7.5 per cent year on year, down from 7.7 per cent in the January-March period, in line with Chinese economists’ forecasts in recent months. At the start of 2013, however, economists – both at home and abroad – were much more upbeat about the prospects for Chinese growth.
So, what changed?
China’s growth has shown a cyclical pattern over the past two decades. Immediately after the collapse of Lehman Brothers in September 2008, China unveiled a ¥4 trillion stimulus package. The economy rebounded quickly, with the annualised growth rate soaring to 12.1 per cent in the first quarter of 2010.
To rein in a housing bubble and preempt a rise in inflation, the People’s Bank of China tightened monetary policy in January 2010. Then, to arrest the resulting loss of economic momentum, the PBOC loosened monetary policy in November 2011.
Most people believed that rapid growth would quickly be restored once again. But the rebound did not come until the fourth quarter of 2012. Worse, instead of establishing renewed economic momentum, the growth rate fell in the second quarter of 2013 and all major forecasters are now revising their projections of full-year growth downward.
http://www.todayonline.com/chinaindia/ch...ns-plateau
China’s new inflation constraint explains plateau
China’s economic-growth rate slowed in the second quarter of this year to 7.5 per cent year on year, down from 7.7 per cent in the January-March period, in line with Chinese economists’ forecasts in recent months. At the start of 2013, however, economists – both at home and abroad – were much more upbeat about the prospects for Chinese growth.
So, what changed?
China’s growth has shown a cyclical pattern over the past two decades. Immediately after the collapse of Lehman Brothers in September 2008, China unveiled a ¥4 trillion stimulus package. The economy rebounded quickly, with the annualised growth rate soaring to 12.1 per cent in the first quarter of 2010.
To rein in a housing bubble and preempt a rise in inflation, the People’s Bank of China tightened monetary policy in January 2010. Then, to arrest the resulting loss of economic momentum, the PBOC loosened monetary policy in November 2011.
Most people believed that rapid growth would quickly be restored once again. But the rebound did not come until the fourth quarter of 2012. Worse, instead of establishing renewed economic momentum, the growth rate fell in the second quarter of 2013 and all major forecasters are now revising their projections of full-year growth downward.
http://www.todayonline.com/chinaindia/ch...ns-plateau