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China Struggles with Expansion
President Xi Jinping is trying to maintain growth while rebalancing the economy. China struggles with environmental damage and with sustaining expansion while limiting debt risk, according to Bloomberg News. And there are always the issues of balancing unemployment, inflation, and social unrest when considering a population of one billion plus.
Chief China economist, Zhu Haibin, of JPMorgan Chase & Co. in Hong Kong, reported that “The argument about whether the target should be 7 percent or 7.5 percent is about how to assess the impacts of reforms — whether reforms can help short-term growth or sacrifice it.”
Bloomberg News has reported that a survey which consisted of 30 economists, the government’s 2014 inflation target will be 3.5 percent. This suggested that the survey revealed the same results as last year.
Caixin, a Chinese financial news provider reported in December that the GDP growth target had been set at 7.5 percent, also saying that the decision was made at the central economic work conference earlier that month.
According to Zhu Haibin, China’s leaders are “still quite optimistic about the impacts on short-term growth from reforms — they believe reforms can bring some new growth dynamics.” Companies seeking to expand into other markets face a range of new and complex financial challenges—from funding cross-border expansion, to leveraging global capital markets, to acquiring companies from very different cultures.
A Hong Kong-based economist, Wang Tao, at UBS AG, reported that according to Bloomberg News, “A lower target would be more prudent and help to reinforce the message that the government wants what it calls ‘growth without negative consequences.’”
Chinese policymakers have taken various new steps to open up avenues of growth. These include the launch of a free trade zone in Shanghai. According to BBC News, China reported that it will open up to foreign firms some telecom services within the zone, including call centres and home internet access provision. It said it will also allow foreign firms to make gaming consoles within the free trade zone and sell them across China – lifting a ban that has been in place on gaming consoles since 2000.
Image credit: www.fooddigital.comChina Struggles with Expansion by Jaan