DHARAMSALA, Sept 19: China’s Premier Li Keqiang has conceded that maintaining steady growth of China’s economy is a daunting task amidst ‘significant changes’.
Premier Li Keqiang has stated that maintaining China’s steady growth is increasingly difficult amid significant changes in the external environment, but China will not resort to massive stimulus, the Reuters reported.
Though what the Chinese Premier implies when he said ‘significant changes’ in the “external environment’ remains unknown, it is safe to say that it points towards a strain on the spine of the communist regime, its economy.
China and the US are currently heavily engaged in a trade war and this may be caused by the wrath of the trade war with the US as predicted in a rare and candid commentary in Chinese state Media earlier in July this year that said “Chinese firms will go bankrupt and that the private companies will be worst-hit by the wrath of the trade war with the US.”
However, Li has said in a speech at the World Economic Forum in Tianjin that China has ample policy tools to cope with difficulties and challenges, and Beijing will keep its macro-economic policies steady.
If China’s economic woes fail to ebb after the ample policy tools at Beijing’s disposal as the Chinese Premier stated it has, it could well mean that in fact a lot more trouble is brewing for the Chinese economy often described by many as a bubble waiting to pop.
The Chinese economy sailed through the global financial crisis in 2012 because the country’s government-owned banks started lending out lots more money. The money came largely from the savings accounts of ordinary Chinese people. It went largely to finance big construction projects, which helped keep China’s economy growing, Michael Pettis who teaches finance at Peking University in Beijing said in his research paper printed on the Brookings Institution’s official web page.
Pettis further observed that China survived the global economic crisis by funnelling tons of money into construction. “This increases economic activity for a while, but the country ultimately overbuilds — and the loans start going bad,” he said and concluded by saying that is a remedy that is sure to backfire.
Across the length and breadth of China, there are hundreds of cities that have almost everything one needs for a modern, urban lifestyle: high-rise apartment complexes, developed waterfronts, skyscrapers, and even public art. Everything, that is, except one major factor: people. These are called Ghost cities.