Eastern Promise: China shows signs of speeding up again
By Michael Northcott Friday, 18 January 2013
The world's second largest economy is finally looking like it may rebound after its slowest growth period for almost 13 years.
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Everyone got a bit jittery when it looked like China’s monster-growth was being doused by Western woes, didn’t they? But it looks like they may be back on course, as according to the latest government figures from the country, growth rose to 7.9%in the last quarter of 2012, compared with 7.4% in the same period the previous year.
Unfortunately though, the increase in growth is not a sign that the West has increased its spending on goods manufactured in China, but instead the growth has come from massive state investment in infrastructure projects. This is Keynesian stimulus as it was meant to be - for unlike the debt-laden West, China is awash with cash to spend on these kinds of wheezes, and it also has some initiatives in place designed to get consumers and companies to spend more money domestically.
Add to that, full-year GDP figures show a less encouraging story. The country’s economy grew 7.8% over the whole of 2012, down from 9.3% the previous year, making it the slowest growth the country has seen since 1999.
Figures like that are obviously not dire, considering the US and Japan are expected to show growth of just 2% and the eurozone countries collectively contracted by 0.2% in 2012. But slowing growth in an explosive economy like China suggests the wider world economy is not faring well.
In recent years the government has been trying to rebalance China’s economy to avoid it being so exposed to the spending habits of Western economies. When recessions and financial crises happen, for example, China’s economy suffers as a direct result.
Still, the Q4 figures were enough to get Asian markets excited. Hong Kong’s Hang Seng index was 0.7% higher, South Korea’s Kospi was 0.5% and Japan’s Nikkei was up 2.1%.
Meanwhile, let’s hope that, for once, we can leave out the woeful tales of how much money has been lost from UK plc thanks to snow disruption today…