The story heard around the world over the past decade has been focused on China’s dramatic and unstoppable economic acension, but the less talked about story at the oment is China’s economic slowdown. Figures released this week show industrial output at a three year low as American and European markets continue to have weak demand and Chinese domestic demand is also quite low.
Beyond the low level of industrial output, which is problematic for a country to factory-focused the way China is, the other other issue involves a lack of investment. The only big source of investment at the moment is government investment, which although significant, still concerns financial observers.
On the good side the latest numbers show a decrease in inflation, which dropped from an alltime high in 2011 (6,5%)to 1,7%. The government is hoping this will help fuel the record growth numbers similar to what we’ve seen in the past. They’ve relaxed policies regarding banking in hopes that more money will be lent out to ailing companies.
While China has amazed the world when it comes to what such a large and aggressive economy can do in a relatively short time period, some reality has now set in. When so much success has been achieved thanks to consumers around the world, now that those consumers are across the board in a bad economic slump, that impact will most definitely be felt in China as well. When you combine that with a credit crunch back home, things may not get back to the same level of amazingness anytime soon.
Photo: LMMAH /flickr