China's Growth Engine Has Slowed Down

China Traffic Jam

China’s gross domestic product (GDP) growth in the first half of 2011 slowed slightly compared to the same period last year.

According to the PRC National Bureau of Statistics (NBS), China’s GDP grew by 9.5 per cent in the first six months of 2011, while the consumer price index (CPI) continued to rise faster than PRC government inflation targets. According to the Wall Street Journal, economists expect the gradual economic slowdown to continue in the second half of the year.

GDP growth slows, inflation continues

Though GDP growth slowed slightly compared to last year, first half growth surpassed the PRC government’s 8 per cent GDP growth target set at the National People’s Congress (NPC) session in March. State Information centre Economist Zhu Baoliang told Xinhua News Agency that he expects GDP growth to slow to 9 per cent in the second half of 2011. Zhu said the slowdown is likely due to slower investment growth and the PRC government’s tighter monetary policy.

According to NBS, China’s CPI rose by 5.4 per cent from January to June compared to the first half of 2010. China’s CPI reached its highest level in three years in June, increasing by 6.4 per cent year on year. Inflation in food prices rose at an even faster rate. Food prices increased by 14.4 per cent in June and by 11.8 per cent from January to June compared to the same periods last year. At the March NPC meeting, PRC Premier Wen Jiabao cited controlling inflation as a top priority for 2011 and said the government would aim to cap CPI growth at 4 per cent.


Survey shows many believe China is or will be world’s superpower

In related news, a recent Pew Global Attitudes Project survey released July 13 indicates that many believe China’s growing economy is beneficial to their country, while the country’s expanding military is viewed more negatively. In Western Europe, the number of people who view China’s economic growth as positive is up 9 percentage points compared to a year ago. 70-nine per cent of Pakistanis, 62 per cent of Indonesians, and 57 per cent of Japanese are optimistic about China’s economic growth. Though most countries still view the United States as the world’s leading economy, a majority of respondents in two out of four Western European countries surveyed said China is the top economic power. A plurality of Americans (43 per cent) said China is the world’s top economy.

The survey also indicates many believe China has already or will replace the United States as the world’s leading superpower. 40-seven per cent of respondents in 18 countries said China has already or will eventually replace the United States as the world’s superpower, a 7 percentage point increase since 2009. Just 36 per cent of respondents said China will never replace the United States as a superpower, down from 40 per cent in 2009.

This post originally appeared at The US-China Business Council.

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