China’s Economy Slows, but Inflation Still Looms

[alp227]

Source: The New York Times

CHANGSHA, China — China’s economy is starting to slow, after two years of torrid growth achieved following the global downturn.

Chinese manufacturers’ backlogs of orders are gradually shrinking in many industries. Purchasing managers have become less optimistic about their businesses’ prospects. And after surging past the United States in car sales over the last two years, the Chinese auto market unexpectedly stalled last month, as carmakers curtailed production plans.

Because China’s cooling economy is partly a result of Beijing’s efforts to contain inflation, some economists are not worried, saying a slight slowdown could be positive. And they say that after the government eases off the brakes, economic growth should quickly pick back up.

But other experts worry that inflation is already so entrenched that the government may be forced to continue braking the economy for a considerable time.

Read more: http://www.nytimes.com/2011/05/31/business/global/31yuan.html?partner=rss&emc=rss&pagewanted=all

[LetTimmySmoke]

1. China's consumes 50% of its GDP, compared to most Western countries which consume 70%

Increasing wages and consumer demand in China, democratizing wealth, and balancing the trade deficit is the only way they're gonna get out of their inflation problem in the long-term.

[Fool Count]

2. If China consumed 70% of its GDP as most Western countries

it would not have the surplus production to send over to those Western countries at
cheap prices. How would the western consumers used to abundant cheap Chinese goods feel
about that?

[LetTimmySmoke]

5. They would feel their wages and job prospects rise.

And find they are able to afford plenty of material goods just fine.

[Fool Count]

3. If China consumed 70% of its GDP as most Western countries

it would not have the surplus production to send over to those Western countries at
cheap prices. How would the western consumers used to abundant cheap Chinese goods feel
about that?

[Corruption Winz]

4. This is usually how it happens when it comes to rapid growth....

Slow and steady has always prolonged the growth. Hopefully, they can fix their problems and we can learn from them in some regards.