January 30, 2014
This is the VOA Learning English Economics Report.
Chinese officials say the country’s economy grew last year at about the same rate as in 2012. The 7.7 percent growth rate was the slowest growth China has reported since 1999. Yet officials say, the growth rate was still higher than their prediction of 7.5 percent.
Ma Jiantang is director of China’s National Bureau of Statistics. He says it is no easy job to keep growth at over 7.7 percent and inflation low at the same time. That is made more difficult by the size and nature of China’s economy, the world’s second largest. Mr Ma says this combination of high growth and limited inflation is unusual in the world.
China’s economy had 10 percent growth rate in the years before the world financial crisis of 2008. That economic expansion resulted from big trade surpluses and full investment. Now, says Ma Jiantang, China is seeking to move away from that growth model. The country is working to balance exports with demand at home.
Recently released information shows that households’ spending in China remains lower than in most economies. Chinese government estimates put households’ spending at about 36 percent of all goods and services produced within the country, that is down from 49 percent in 1978. By comparison, Thailand’s households’ spending represents 56percent of its economy.
Some experts dispute the belief that China’s personal consumption is so low. They say businesses often buy goods for their employees to avoid taxes, this means companies are increasing demand for household goods by buying them directly.
Chinese officials say they want to reduce the economic influence of state control businesses and to let market forces shape the economy. However, economists expect China’s growth to slow in the coming years. How quickly that happens depends on several issues. The recovery of the United States and European economies means rising demand for Chinese exports.
One issue that might slow growth is the expanding node of local government debt, that debt is estimated at about three trillion dollars, or about one third of the size of the economy. China has long tied its estimate of local officials on their ability to grow the economy. Reforms are possible, but some could slow economic growth.
The government is moving away from growth to areas such environmental protection, and the ability of local officials to contain debt. Experts say that could also weaken investment and slow growth.
And that’s the Economics Report.