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Global conditions impact on growth in China

Global conditions impact on growth in China

Economic turmoil across the world is starting to inhibit growth in China.

According to official figures, the country saw gross domestic product go up by 8.1 per cent in the first quarter of 2012, when compared with the same period of 2011.

However, year-on-year growth dropped to 7.6 per cent between April and June, partly because conditions in places such as Europe and the US have led to demand for Chinese products slumping.

While this may cause concerns about the likely impact on the global economic recovery, some have argued that this is good news in light of current conditions around the world.

Indeed, Sheng Laiyun, spokesman for China's National Bureau of Statistics, noted that both domestic and external demand has been "tepid" in the last few months.

"The growth rate of 7.6 per cent is already an achievement because the economic situation facing China has been complex and severe," he stated.

Martin Patience, the BBC's correspondent in Beijing, added that these are the worst economic growth figures China has seen since the global financial crisis began.

He noted that officials in China are "pinning their hopes on investment" in order to trigger an upturn in gross domestic product.

This, he said, is why they have put money in social housing and other public works, reduced fuel prices and cut the cost of borrowing in order to encourage lending.

Mr Patience stated that economists are generally confident these moves will yield the desired results and trigger a rebound in growth over the next few months.

He added that China, which is the second largest economy in the world, is going through a sensitive time at the moment, since the process of changing leader is due to start soon.

The correspondent said this means that if the economy continues to slow down, the country may experience some social unrest before the end of the year.

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