China’s leaders face new pressure to stimulate a slowing economy after growth fell to its lowest since 1991, according to new figures released on Monday.
The world’s second-largest economy expanded 7.5 percent over a year earlier in the three months ending in June, down from the previous quarter’s 7.7 percent.
According to Zuo Xiaolei, an economist working at China Galaxy Securities, growth in China is expected to stay in single digit level, and this has not caused huge rates of unemployment.
“A growth rate which has been fluctuating around 7.5 percent has not caused huge rates of unemployment. So we believe that a margin of fluctuation centered around 7.5 percent is within our potential growth level. We should not worry because of these minor fluctuations,” she told AP Television.
A decline in Chinese economic activity could have global repercussions, denting revenues for suppliers of commodities and industrial components such as Australia, Brazil and Southeast Asia.
Lower Chinese demand has already depressed prices for iron ore and other raw materials.
Despite the slowdown, communist leaders have expressed determination to stick to plans aimed at nurturing slower and more sustainable growth.
And the ruling party’s 7.5 percent growth target for the year is stronger than forecasts for the United States, Europe and Japan.
According to Xiaolei, “China’s rapid growth in the last 30 years was based on a major factor, given by advantageous conditions of labour forces, but this has now changed. So it is normal that our potential growth has changed accordingly. I think China has entered a new economic phase, and the speed of growth of our economy will also change accordingly.”
Chinese leaders have promised to launch reforms aimed at making the economy more productive and helping entrepreneurs but no major changes are expected until after a Communist Party meeting in the autumn.
Growth also has been dented by a crackdown on overly fast growth in bank lending.
Government efforts to tighten lending controls caused a temporary shortage of credit in Chinese financial markets last month.
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