China’s economic growth eases to 10.3 percent
China’s gross domestic product, the broadest measure of economic output, grew at an annual rate of 10.3 percent during the second quarter of 2010. But the pace eased compared to the 11.9 percent rate during first quarter.
With more than 1.3 billion people, China is the world’s largest country, and that fact, combined with its rapid economic growth of recent years, has made it a major player in the global economy.
But the moderate slowdown was widely anticipated and is not a cause for concern for economists, many of whom were worried about China’s economy overheating and falling in danger of rampant inflation.
“Even an 8 percent GDP growth rate is a very healthy for China right now,” said Todd Lee, managing director of the Greater China division at IHS Global Insight.
In 2009, as the U.S. and other global economies were in a deep recession, China was able to maintain strong economic growth — at a pace of 8.7 percent.
The nation’s exports have been surging and the real estate sector has been rapidly expanding, sparking fears of a Chinese housing bubble. But Chinese officials have been taking steps to control the growth.
“The Chinese government has been jawboning banks to crackdown on mortgages and pullback on lending to help moderate prices,” said Jay Bryson, Wells Fargo global economist.
“You don’t want to have China develop asset bubbles and go through boom and bust cycles. It’s better to have them clamp down now and have a soft landing instead of slamming on the brakes later,” Bryson said.
The measures would appear to be working: Chinese property prices fell for the first time in 16 months, according to a government report released earlier this week. The nationwide index of property prices across 70 medium-sized Chinese cities decreased 0.1 percent in June.
The People’s Bank of China also announced last month it would allow its currency to appreciate against the dollar. A rise in the yuan’s value could further slow growth in China’s exports by making its goods more expensive overseas. A sharp drop in the value of the euro compared to the dollar during the quarter already raised the price of Chinese exports to Europe, the leading market for its products. The yuan had been pegged to the greenback since 2008.