Is China’s Economy Slowing Down?

Although China is still the fastest growing economy in the world, GDP growth has declined for four quarters in a row.

Indeed, in the wake of weakening global economy and rising inflation, the task of sustaining the current pace of economic growth is getting more and more difficult. In fact, the main reason behind China’s growth is its ability to produce and export cheap goods. For instance, the average contribution of exports to GDP rose from 16% in 1995 to 42% in 2007. These statistics help us to understand the growing reluctance of Chinese officials in letting the yuan to appreciate further. In addition, the Chinese government is trying to help exporters by increasing export-tax rebates. For example on August 1st the export-tax rebates on clothing products was increased from 11% to 13%, and on bamboo products from 5% to 11%.

Anna Fedec,
8/16/2008 1:51:12 PM