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China’s declining GDP has sent shockwaves through the financial sector as analysts begin to question China’s long-term economic strategy. As Minxin Pei points out, “zombie firms,” or companies primarily supported through bank loans and government subsidies, are complicating China’s sustained growth. By eliminating these firms and instituting reforms, China can bolster innovation and ensure the opening of its economic markets.
Although China’s slowing growth has caused a stir amongst analysts; He Weiwen explains China’s growth rate is not of concern.
China doubters around the world have been quick to pounce on slower-than-expected GDP growth in the first quarter of this year. But slower growth is actually good for China – provided that it reflects the long-awaited shift to an economic structure that draws greater support from domestic private consumption.
In the wake of the global economic crisis, and the dissatisfaction with democracy in many developing nations, leaders in Asia, Africa, and Latin America are studying the Chinese model far more closely.
Loan growth in China’s shadow-banking system has surged in recent months, but Andrew Sheng and Xiao Geng warn that without proper financial reforms this unregulated system could put the nation’s sustained growth at risk, threatening economic stability.
The Boao Forum for Asia in China serves to promote regional economic ties between China and its neighbors. Following this year’s conference, attendees hope the spirit of the Boao Forum will lead to greater cooperation amongst Asian nations.
2011 China-United States Exchange Foundation. All rights reserved.
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