China responds to the contraction in exports with domestic demand stimulus

February, 2012

China's economic growth, while remaining significantly positive, is experiencing a slowdown. Main causes of this contraction, the reduction of real estate sales and exports fell. The Government, in response, is working on manoeuvres to stimulate domestic demand.

According to Chinese statistics on the growth of the country, it would be experiencing a slowdown: the data on gross domestic product released by National Bureau of Statistics on the last quarter of 2011 give an account of an increase in the item in the order of 8, 9%, down from +9.1% the previous quarter. A decisive influence on this result, the decrease in export growth and the turnaround of its real estate market: the contraction in exports is undoubtedly due to the global economic crisis that is affecting countries that have always been main markets for Chinese products; with respect to the second aspect, the real estate market statistics show that in 2011 the sale of real estate has reached the lowest level in the last three years. The sale of housing is, in fact, increased by 3.9% compared to 2010, 4.1% less than the increases recorded in 2010.
“I am confident in the economic future of China”

Zhang

Chinese Ministry

In response to this situation, economists expect government intervention to stimulate domestic consumption, now standing at around 33% of gross domestic product. Policymakers in Beijing have, in fact, more limited margins for maneuver for stimulating exports, mainly because of the rising in labor costs, making Chinese products less attractive, and levels of international demand declined. The Chinese Minister of Commerce, Chen Demin, at a press conference, declared that the government is studying a range of facilities that should prompt the Chinese to consume appreciably more than what has been done so far. For 2012, the resumption of growth will, therefore, be the key objective and priority of the next economic policy measures .