China, the world’s second largest economy, looks like it is getting back on track as it seems ready to reach an annual growth rate of 7.5 percent this year.
Chinese officials have been very determined to meet the 7.5 percent growth target this year. That number seems incredibly ambitious for Europe or even the United States, but China has done even better in previous years.
The target rate of 7.5 percent is lower than China’s growth for the past few years. Before that, the country experienced growth in the double digits, so it is no surprise that China wants to maintain this level of growth and is pushing to make sure that happens.
The National Bureau of Statistics’ purchasing managers’ index, PMI, for China rose to 51.0 in August. Numbers above 50 mean that activity is expanding while numbers below 50 mean it is contracting.
China has been trying to prevent an economic slowdown in the country with a number of measures, such as investing in railroads and public housing.
Chief China economist at JP Morgan in Hong Kong, Haibin Zhu, notes that the Chinese economy has improved recently. “One of the reasons is the lagging effect of credit growth earlier in the year, while the second is the recent shift in the policy stance and more concrete policy announcement.”
Last week, the Vice Finance Minister Zhu Guangyao announced that economic growth can be achieved through structural adjustments instead of stimulus. The Chinese economy looks like it is moving more towards a consumer driven one, but the growth is still threatened by various factors, including uncertainties about exporting.