Economic Growth of China to Slow Down

China’s Slow Economic Growth

First Published Date : July 25, 2010 ADawnJournal.com

China over the past few years has been an amazing success story with a massive amount of growth over the past decade. The country of China is expected to overtake the United States as the most dominant economic power on the planet, but that may not come as soon as many forecasters thought. With the recession hitting the world hard, Citigroup Inc. has lowered the forecast for China’s economic expansion for the rest of 2010. China is currently the third-largest economy in the world, right after the United States and Japan, but fewer purchases by consumers in those countries have caused less goods being exported out of China.

China showed a slowing in its second quarter, which resulted in the forecast by Citigroup being lowered for the third and fourth quarters of 2010. The gross domestic product of China was originally forecasted to be 10.5 percent for 2010, but that has been lowered to 9.5 percent. This resulted in the biggest one-month reduction in the outlook of the country’s economy since 2001. In addition, the growth projections for 2011 were lowered, as was the economic forecast of the major trading partners of the United States and China.

The world’s economic growth is expected to slow due to China trying to curb property prices, Europe’s debt issues and the economic outlook of the United States. In 2011, it is forecast that China will have its economy grow by about 8.8 percent, which is half a percent lower than the previous forecast. One good thing is that the country will see its inflation rate go down next year, falling from 4.6 percent this year to 3.6 percent next year.

In the second quarter of 2010, China only had a growth of 10.3 percent, which was lower than the 11.9 percent increase seen in the first quarter. The inflation rate fell from 3.1 percent in May down to 2.9 percent in June. In addition, property prices around the country fell by .1 percent in about 70 Chinese cities, which ended almost a year and a half in growth for property prices in the country. Citigroup was not the only bank to lower the rate of increase for China. Deutsche Bank AG forecasted that China would have a growth rate of 8.6 percent in 2011, down from the bank’s forecasted growth rate for 2010 of 9.6 percent.

Does this mean that the economy for China is going to reverse? Not in the least. China is still a force to be reckoned with around the world as its economy continues to grow at an amazing rate. No other country on Earth is coming close to the growth rate of China these days and even if China has seen a decline, it is still growing during a major recession. As the world moves out of the recession, China again will see a major growth for the country’s economy and that will eventually push it past the economy of the United States midway through the 21st century.