'It’s Alive, or is it?’ Chinese Government plays Frankenstein with its Economy

China is on a mission- to supercharge its aging, sluggish economy through some very radical changes. Sadly, these efforts from the Chinese Government seem to be backfiring- the G.D.P is slowly losing steam, and as reliable market data from China’s National Bureau of Statistics affirms, the economy is heading a very ‘predictable’ way without pulling off some actual big numbers.

The Chinese economy is up by 7.5% in the second quarter of this year, as compared to the same duration last year. However, the data for Industrial output is a cause for concern- falling to 8.9% from the 9.2% as registered in May. Retail sales show a promising turn- presently placed at a hike of 13.3% as compared to last year, a rise from 12.9% as compared to May.

The Chinese economy has been subject to a nagging slowdown for the better half of the last two years. However, the Chinese Government seems to have been ready for this onslaught, maintaining that for a more secure, independent economy in the future, the current jitters need to be tolerated. China has traditionally relied on cheap credit, infrastructure investment, heavy manufacturing and exports to drive their economy, to equally good responses. However, in the current world, this model is facing serious competition and is prone to unexpected breakdowns. Thus, the Chinese Government engineered a bold growth model that relies on expansion of key business domains- a more productive, sustainable but slower option. Authorities are hopeful that in time the bleak trends will be reversed and more growth sustainability can be achieved. An annual G.D.P growth of 7.5% is still the prized goal.

Last week, the Chinese Government officials met to strategize a move that will prompt the Chinese trade organizations and trade pundits to express confidence in the Government’s growth targets in light of the radical new approach to going about this business. The authorities wish to paint a rosy picture wherein the economy is tuned more towards domestic consumption, is aware of basic inefficiencies and avoids pressures on the environment as is currently the case. The need of the hour, as is universally assumed in China, is to ‘innovate and think expansively to expand the domestic market’. Apparently, the Government is ready to bear the current pain- for the assured, long term gain.