Home » News and Events » News » China’s GDP growth rate suggest economic restructuring lagging

China’s GDP growth rate suggest economic restructuring lagging

 

shang2

The skyline of booming Shanghai.

China has reported a higher-than-expected annualized growth rate of 6.7 percent, the same rate as in the first quarter. As with most dictatorships, it’s difficult to know how accurate that number us. However, in any case, most analysts saw the number as suggesting that the government of President Xi Jinping, in part to keep political control tight, is avoiding economic restructuring.

The Wall Street Journal reported: “Economists say a slower growth rate in the second quarter over the first quarter’s 6.7 percent pace would have sent a welcome signal that China was tackling excess industrial production, rising corporate debt and state-owned enterprise reform.”

“Instead, by ramping up government spending and opening the credit taps, Beijing is likely to fuel overcapacity and see private companies crowded out by risk-averse state banks and bloated state companies.”

“It’s a pretty clear picture with the big, overcapacity state-owned enterprises getting credit and reform plans not getting support,” IG Markets Ltd. analyst Angus Nicholson told the WSJ. “The government talks a good story about helping the private sector, pushing through supply-side reform and lowering investment to state companies, but you’re not actually seeing any of this in the statistics.”

For the full Wall Street Journal story, please hit this link.