BEIJING – China’s economy is under “enormous pressure” because despite the stimulus measures, it continues to decline. This news was announced Prime Minister Wen Jiabao last Sunday.
Wen’s statement diminished the hope that the country will soon recover from its sharpest drop since the global financial crisis of 2008.
“The economy generally runs at a steady pace, but there is still enormous pressure to come down,” he quoted in the official news agency, Xinhua.
Companies and investors are closely watching the second largest economy at the prospect of continued deceleration. This is because global implication may be experienced if China’s demand for products manufactured in the U.S., Europe and other countries will continue to fall.
The Chinese government has reduced interest rates two times in one month alone and has also dropped the price of petrol. Furthermore, they have promised a rise in the number of investors in affordable housing and other public works to revive growth in the first quarter. It sank to its lowest level in nearly three years which showed a drop of 8.1%.
Despite these measures, experts predict that the new economic data which will be released in the coming days, show that growth has decreased to 7.3% in the second quarter.
“The economic slowdown tends towards stability,” he said during a visit this weekend in eastern China.
The Government aims to reduce reliance on exports and investment to promote growth by boosting domestic consumption.
Wen said the government is also trying to diversify and promote a steady increase in exports. The Government has set a target of 10% in growth for trade this year alone. According to the Ministry of Commerce this may have unexpected setbacks in Europe or elsewhere.
“China should continue its proactive fiscal policy, focusing particularly on improving the structural tax cut policies, while continuing to implement a prudent monetary policy to effectively establish the structural contradiction between supply and demand for credit,” said Wen.