By most standards, China has managed impressive growth in the face of the Global Financial Crisis and its aftermath, but by the standards of its recent historic growth, the economy has slowed in the face of weaker global demand for Chinese products.
The Chinese government has decided to reduce taxation on small firms and to hasten the construction of new railways which will boost the nation’s infrastructure. The announcement was welcomed by regional investors and Asian stock markets closed higher.
The infrastructure plans call for an 18% increase in railway lines under construction over last year’s figure; mainly, these are being constructed in the central and western regions of China. In order to meet the costs of this new construction, the government has announced that it will raise $24.6 billion through the issuance of new bonds. Histrorically, modern governments first turned to bonds to raise capital for such infrastructure projects during the industrial revolution.
China has announced that the tax breaks for small and medium sized businesses last year, as a measure to boost the economy, will be continued into 2016. A government spokesman noted: "We must roll out policies that spur businesses' vitality, effectively increase demand and boost jobs.” The statement echoes the reassurances given by the Chinese Premier, Li Kegiang who said that the government’s main preoccupation is to create employment and that this was more important than hitting a specific growth target.
The ruling Communist Party announced that it was targeting an annual growth figure of 7.5% for 2014 which it declared during the National People’s Congress which was held in March. However, in the light of some disappointing economic data, analysts remain somewhat sceptical that China will be able to meet this growth forecast.