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Has China’s Economic Growth Finally Stabilized?

Though China’s financial system is fraught with vulnerabilities, many economists believe that the country has at last entered a new period of stable growth of about 6.5% per year – an assessment echoed by the IMF. Given slowing fixed-asset investment growth, however, they would do well to rein in their expectations.

BEIJING – For the last decade or so, China’s economy has been on something of a roller coaster ride. As 2018 begins, is the country approaching a new ascent, a steep drop, or something in between?

Prior to the global economic crisis a decade ago, the Chinese economy was growing at a breakneck pace. But when the crisis hit, the growth rate fell relatively sharply. Thanks to a $4 trillion stimulus package, growth soon reached its trough and began to climb again, reaching 12.2% year on year in the first quarter of 2010.

Soon after, however, monetary tightening put economic growth back on a downward trajectory, spurring the government to loosen policy and introduce mini-stimulus packages in late 2011 and early 2012. This produced a short-lived and moderate rebound, with economic growth again beginning to slide, albeit less steeply, soon after.

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