SLOWING ECONOMIC GROWTH FORCES LOCAL GOVERNMENTS TO ACT
By Thomas Clouse
China's economy showed further signs of slowing in July, with exports expanding only slightly and industrial production falling to its lowest growth rate in three years.
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Chinese economy still slowing |
| Photo Credits: PCRUCIATTI / Shutterstock.com |
According to the customs office, China's exports rose only 1% year-on-year, compared to 11.3% in June, and imports increased 4.7%, compared to a June rate of 6.3%. Industrial production expanded by only 9.2%, the statistics office reported, its lowest reading since May 2009.
In more positive news, inflation fell to a 30-month low of 1.8%, raising hopes for more expansionary monetary policy. But recovery in the real estate market could complicate policymakers' efforts, as they try to avoid any actions that could increase housing prices further.
Governments in several Chinese cities and provinces have announced plans for stimulus measures after the country's growth slowed to a three-year low of 7.6% in the second quarter. The central government has implied its support through public comments and the acceleration of project approvals; thus, other local governments are expected to introduce plans. These stimulus measures could face funding problems, however, as the weak real estate market dampens demand for local government land sales.
China's stock market regulator introduced several measures last month to increase investment in the country's capital markets. The China Securities Regulatory Commission reduced transaction fees and expanded an over-the-counter equity market program, while introducing a plan allowing employees to receive up to 30% of their pay in shares of their listed employer.
