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Anti-crisis reforms began in China
Material posted: Publication date: 08-05-2013

China landed in the middle income trap, can no longer grow through exports and choking without adequate banking system. The state Council of China unveiled a detailed plan for economic reforms.

The document adopted by the state Council, specifies the measures that should lead to the reduction of bureaucratic interference in the economy. This, according to the authors of the plan, will accelerate its rate of growth.

Among the innovations stand out steps to reduce the debt of local governments, attracting investment into the rail sector and improving the investment climate. Recent figures on the state of the Chinese economy has disappointed financial markets – the GDP in the first quarter fell short of forecasts and increased by less than 8 %. Some observers already see a full-fledged crisis in the second economy of the world.

Although in developed countries the rate of GDP growth at 8 percent now can only dream of, a rare global economic review recently without worries about a Chinese slowdown. After all, until recently the norm was to increase GDP, expressed in double digits.

After recently the power in China shifted to a new generation of politicians led by President XI Jinping, talks about whether China is able to gain the former pace, only amplified. A separate reason for concern is the commodity exporters, notes the main analyst "CSG asset Management" Alexander Potavin:

"China is the world's largest consumer of raw materials, and therefore, if there is further deterioration of the economic situation in China, respectively, we will see some pressure on oil prices".

However, the slowdown does not necessarily mean a negative. First, it makes the growth more balanced – that is, without building roads that no one drives, or the construction of cities where no one lives. And secondly, can mean the inflow of investments to the partners of the PRC, says the head of the Department of Oriental studies of the Higher school of Economics Alexey Maslov:

"A large number of Chinese funds derived from countries abroad. And in this respect, oddly enough, the slowdown of the Chinese economy is largely positive impact on the investments of China, to such countries as Russia, Kazakhstan and all Central Asian countries. Oddly enough, the slowdown in China's GDP will have a positive impact on Russian-Chinese relations".

While China's total investments in the Russian economy does not exceed two percent of the total amount of foreign investment. Another thing – the CIS countries. For some of them China is the largest creditor and the main investor, continues Alexey Maslov:

"The main investment flows going from China to Central Asia, primarily in Kazakhstan, where bought oil, coal deposits, uranium. That is, China is, in essence, transfers its assets abroad."

The Chinese capital that is looking for out of the country largely because of the immaturity of the financial market of China itself. In addition to this problem, from the PRC authorities now are waiting for measures to enhance domestic consumption, the transition to the production of goods with higher value added and economic liberalization.


Source: Voice Of Russia

Tags: economy , crisis , China

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