Concerns Remain Despite Strong Growth in China's Economy

The stronger-than-expected growth in China ’s economy in the March quarter hasn’t assuaged concerns over the nature of that growth, and its implications for the rest of the world. Indeed, it has exacerbated them.in the quarter, relative to the same quarter last year, was surprisingly strong.

With domestic consumption weak, that excess capacity has been reflected in a strong increase in export volumes, which were up 4 per cent in the quarter. The value of those exports in US dollar terms, however, rose only 1.5 per cent year-on-year – which means the prices of those exported goods were falling.What might be regarded as the dumping of cheap goods in export markets is producing a strengthening backlash from China’s trading partners.

Dumping subsidised goods, or goods that because of the excess capacity in China’s factories are being sold at sub-economic or uneconomic prices, into the global market is an unsustainable strategy. All that is true, but the Americans and Europeans are adamant that they aren’t going to allow China to maintain its dominance of the green technologies that are vital to the response to climate change by using unfair trade practices – the barriers to entry to China’s domestic markets and the layers of subsidies for sectors that are prioritised within Beijing’s five-year plans.

At the core of the challenges confronting the Chinese policymakers remains the depressed property sector, once one of the key drivers of the economy. It continues to shrink, with investment down another 9.5 per cent in the quarter , new construction starts down 27.8 per ent and the amount of floor space sold down 19.4 per cent.

China Economy Growth Concerns Domestic Demand Property Sector

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