China is in the spotlight once more, with news of a slowdown in economic growth in the third quarter. The world's second largest economy grew by 6.9 percent, compared to 7 percent in the previous quarter.
China is in the spotlight once more, with news of a slowdown in economic growth in the third quarter. The world's second largest economy grew by 6.9 percent, compared to 7 percent in the previous quarter.
It is the lowest rate since the 6.2 percent recorded in 2009 during the global recession. And this is despite several stimulus measures from the government.
Speaking to CNBC-TV18, Scott Kennedy, Deputy Director, Centre For Strategic & International Studies shares his views on what is plaguing Chinese growth.
Below is the verbatim transcript of the interview..Q: Even though the quarterly numbers were more or less along expected lines, concerns only seem to be mounting for China. Has the worst now been confirmed for China? A: There is something in here for everybody. For those who are really worried about the Chinese economy, there is data that shows a continued slowdown in the numbers particularly in industry. I think probably for me some of the most concerning data has to do with their private investment which has registered the slowest growth in six to seven years. The other is that real GMP was larger than nominal GMP which means that there is deflation that is still affecting the economy and this is really a bad sign that demand is still quite low.
On the other side you could see positive numbers in the transition t o services and consumption for those who want to argue that the economy is transitioning towards a different growth model. So, there is that data too. However on balance these aren't numbers to sing about.
Q: Exactly not numbers to sing about but it is important you talked about private investments being at a six year low because China has been trying to restructure its economy away from its export lead model to focus more on domestic consumption but if you look at the data from passenger vehicle sales for instance last month only one percent even smartphone sales growth is projected to grow at 1.2 percent as against 20 percent in 2014. Would you then say that the restructuring efforts are not working today?
A: I would, you know in the third quarter services accounted for just over 50 percent of the economy, about 51 percent which for some shows big transition but a huge part of that growth and services is financial investment from the stock market and if you look at the turn over in the stock market over the summer in July and August in the third quarter it was quite massive because of the concerns there. So, that is really not the type of growth in services that you want to bank on for restructuring the economy overall. So, what you need to do is wait to see what the full year numbers are to tell you whether services are really playing a much important and constructive role on the economy.
Source: Deflation still impacting China growth: Expert
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