Vice Premier Sees Positive Economic Signs for China

Vice Premier Zhang Gaoli said his country’s economy is stabilizing, with gains in such areas as the service sector and employment. Economic growth expects to retract from 7.4 percent last year to 7 percent in 2015, a 25-year low.

Vice Premier Zhang Gaoli said his country’s economy is stabilizing, with gains in such areas as the service sector and employment. Economic growth expects to retract from 7.4 percent last year to 7 percent in 2015, a 25-year low.

Analysts have high expectations when it comes to Chinese growth, but Gaoli is telling critics and forecasters to back off. He argues that it is not necessary for China to maintain such a high rate of growth because history has shown that the Chinese economy suffers in the end. Whether or not this is spin on the part of the government, leaders are adapting to slower expansion and a worldwide recession. Chinese officials plan to keep the economy on an even keel and keep growth within reason, with a focus on quality instead of quantity.

China Adjusts for the Short-Term

The Chinese are doing everything they can to gain some economic traction. For one thing, the central bank slashed interest rates two times since November to combat deflation, including a cut in banking reserves. More cuts are expected, and the government will run up a massive budget deficit due to stimulus spending. The government is walking a tightrope between spending and slashing where needed, and officials are tailoring their focus on certain areas of the economy.

Private investing, innovation and technology are other sectors making progress. China has been especially determined to manage its pollution problem, conducting an overhaul on certain parts of the industrial sector to mitigate damage to the environment. Improving environmental standards is also China’s way of attracting more foreign investment because many companies are concerned about the country’s notorious pollution problem. China is also trying to lure outside employers by lowering costs for doing business on the mainland.

The Chinese Look to Infrastructure for Added Growth

Although infrastructure projects have typically gone to state enterprises, subcontractor employment from abroad is occurring in such sectors as the elevator industry and security, and using non-state companies from outside is a growing trend. In addition, China needs infrastructure development in places like Inner Mongolia and western China. Infrastructure is part of the reason why the Chinese economy underwent around 10-percent growth in 2011, and China still has a chance of exceeding expectations if infrastructure projects are a primary focus. However, another factor is China’s middle class.

Consumer confidence has waned because many are fearful of what the future holds. If the economy is going to thrive, China must also assure its citizens that prosperity will continue by addressing job growth and rising costs. China must also provide additional essential services including railway development, water conservation and urban planning.