China is the world’s second largest economy behind the USA and enjoys the highest level of growth in any major economy by far. However, the phenomenal rate of growth which China has enjoyed has been tailing off recently – but would still leave any other economy green with envy. On the back of sluggish demand in major export markets such as the USA and Europe, growth has slowed from an annualised figure of 7.7% for Q1 to 7.5% in Q2. A survey by banking giant HSBC suggests that factory output fell to a 11-month low in July.
China has a vast domestic market, but the trickle-down of wealth to average Chinese citizens has yet to be enough for domestic demand to be the driver that it is for growth in most competing economies.
The Chinese authorities have acted to reverse the slowing of China’s economy with a number of measures design to promote growth. These include temporarily freeing small businesses with turn-overs below $3257 per month from VAT from next month. Authorities believe this will help at least 6 million businesses and support employment and income for millions of people. Customs procedures will be simplified to cut costs and facilitate exports by small to medium sized businesses.
The government also announced that it would relax controls on the nation’s railway construction sector to help speed its development and provide some of the required initial funding. This will be achieved by the issuing of government bonds aimed specifically at providing funding for the nation’s rail infrastructure. However, it made it clear that the intention was to stimulate private sector involvement in the sector. No doubt foreign engineering firms will be evaluating the potential that such an expansion may offer them.
China Acts To Support Growth
Dr. Mike Campbell is a British scientist and freelance writer. Mike got his doctorate in Ghent, Belgium and has worked in Belgium, France, Monaco and Austria since leaving the UK. As a writer, he specialises in business, science, medicine and environmental subjects.