Last year, Chinese GDP growth reached a two-decade low, and no upturn is in sight. But, as Premier Li Keqiang seems to recognize, this downward trend could actually be beneficial, spurring the structural reforms that China needs to achieve its longer-term goal of more balanced and stable GDP growth.
SHANGHAI – Everyone is talking about China’s economic slowdown. Last year, Chinese GDP growth reached a 13-year low, and no upturn is in sight. But, as Premier Li Keqiang seems to recognize, this trend could actually be beneficial, spurring the structural reforms that China needs to achieve its longer-term goal of more balanced and stable GDP growth.
Recent assessments have offered a downbeat picture of the world’s second-largest economy. In its latest Global Economic Prospects report, the World Bank cut its 2013 economic growth forecast for China from 8.4% to 7.7%. Moreover, recently released central-bank data show that Chinese banks increased their lending by only about ¥667 billion ($108 billion) in May – a roughly ¥125 billion decline from the same period last year.
But simply lending more would not improve the situation. Given that outstanding loans already amount to nearly double China’s GDP – a result of the country’s massive stimulus since 2008 – new loans are largely being used to pay off old debts, rather than for investment in the real economy. Thus, the more relevant concern is that the balance of outstanding loans has not risen.
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Howard Davies
fears that bringing the current bout of inflation under control will carry high costs, suggests ways monetary policymakers can protect their reputations, defends the UK Treasury from accusations that it is too powerful, and more.
For decades, relative global stability, sound economic-policy management, and the steady expansion of trade to and from emerging markets combined to keep costs down. But now all these conditions have been overturned, and the world is settling into a dangerous and destabilizing new regime.
explains why the long era of low inflation, cheap imports, and consistent growth is now over.
If it passes, the US Inflation Reduction Act would be a landmark legislative achievement. With provisions to accelerate America's clean-energy transition, control health-care costs, and restore some sanity to the tax code, it will not only curtail inflation but also bolster America's long-term competitiveness.
explains how the legislation would address several key longstanding problems facing America.
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SHANGHAI – Everyone is talking about China’s economic slowdown. Last year, Chinese GDP growth reached a 13-year low, and no upturn is in sight. But, as Premier Li Keqiang seems to recognize, this trend could actually be beneficial, spurring the structural reforms that China needs to achieve its longer-term goal of more balanced and stable GDP growth.
Recent assessments have offered a downbeat picture of the world’s second-largest economy. In its latest Global Economic Prospects report, the World Bank cut its 2013 economic growth forecast for China from 8.4% to 7.7%. Moreover, recently released central-bank data show that Chinese banks increased their lending by only about ¥667 billion ($108 billion) in May – a roughly ¥125 billion decline from the same period last year.
But simply lending more would not improve the situation. Given that outstanding loans already amount to nearly double China’s GDP – a result of the country’s massive stimulus since 2008 – new loans are largely being used to pay off old debts, rather than for investment in the real economy. Thus, the more relevant concern is that the balance of outstanding loans has not risen.
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