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China Estimates 2013 Economic Growth Slowed to 7.6 Percent

Date:26-12-2013

According to the official Xinhua News Agency, China’s cabinet estimates that this year the economic growth slowed to 7.6 percent. The cabinet has also warned that mounting challenges are putting pressure on the country’s traditional growth model and economic growth might decline further. This forecast is below the 2012 growth rate of 7.7 percent. However, this was above the government’s target growth rate of 7.5 percent.

Although China has one of the strongest economic growth in any major world economies, this year’s forecast rate is nearly half that of 2009’s growth rate of 14.2 percent.

A growth rate of 7.6 percent would mark a third straight annual drop in the expansion rate. According to Xu Shaoshi, China’s minister in charge of the National Development and Reform Commission the government cannot deny a downward pressure on economic growth. In a report by the State Council, potential problems that are plaguing the economy include slow economic reformation, worsening pollution and social discord among interest groups. Xu Shaoshi has also stated that the country’s traditional growth pattern is challenged by environmental problems, rising labor costs, excess production capacity in certain industries and weak global demand.

Chinese leaders are trying to guide China to a more sustainable growth but a surprisingly sharp decline in 2012 and 2013 prompted concern about politically dangerous job losses. In mid-2013, Beijing increased growth with a mini-stimulus of higher spending on building railways and other public works.

According to the Xinhua News Agency, the government will continue its initiative to reduce excess production capacity in some industries such as cement, glass, steel and aluminum, in which supply exceeds demand. An excess of supply in those fields has led to price-slashing which has threatened the final health of companies.

Chinese leaders are also under pressure to substitute a growth model based on exports and investment which was effective for China’s rapid expansion in the last three decades but which has now run out of steam.

The ruling party issued a development blueprint last month that promised to revive the economic growth of the nation by opening more areas to private business and giving the free market a bigger role. It has also assured to introduce more competition in some industries which are dominated by state companies. However, it has stated that government ownership will remain at the core of the economy.

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