China’s GDP shrinks

China also falls victim to the economic crisis. According to official estimates of the administration of the Republic of China, the growth rate for next year, 2012, should go below 9%, the worst since 2001. This trend has already begun to manifest itself in the second quarter of 2011, with GDP at 9.5%, with a slight decline from the previous quarter, when the figure recorded was 9.7%. The estimates for the last quarter are going in this direction with a 9% of GDP, while the figure for 2012 amounted to total expected ‘8.3%.
Experts attribute the decline to the monetary tightening of 2011 with which the Chinese government is trying to combat the phenomenon of inflation that has hit the dragon, the lower investment compressed by limiting access to credit led to a decline in production was reflected Inevitably, the growth figure. But in 2012 China’s GDP will also be influenced weakening global demand for goods and services. This case, combined with the effects, that may be residual if the government will loosen the tight monetary policy, determined by the fight against inflation will cause a compression level of growth of a locomotive in the world. In these circumstances, Beijing could take advantage of this possibility even more negative for lower inflation that afflicts, but above all, could exacerbate the country’s economy. An even greater tightening of credit would offset the lower demand and could thus allow the Chinese government to prevent a phenomenon of higher inflation and much feared. The question is whether a lower growth will enable China’s expansionary policy, it must be said that in the current global rate of growth as China is a very respectable value, which can limit the negative effects of the percentage of GDP is missing, more difficult if The global downturn should remain: the volume of unsold production could block the production chain, with serious repercussions on the economic structure of the country, as well as create serious problems of a social nature that should be added to the already difficult situation on civil rights. It ‘possible that China, which holds much of the world’s public debt, try to stimulate other economies, especially those more likely to consume (eg the U.S.) with ad-hoc monetary policy, but this would only postpone the problem. The reality is that China has entered too many goods on a market that is saturated in part and in part it is no longer able to buy, the only emerging markets are not sufficient to dispose of a huge production and the crisis in rich countries strikes ones such as China, based on a huge volume of production. For China, the road would be a greater specialization in key sectors (such luxury), but the current production level does not allow immediate reuse in Beijing a necessary part of the economy to maintain double-digit GDP.

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