Tags: China | Global | Growth

Experts: China May No Longer Fuel Global Growth

Tuesday, 06 March 2012 07:34 AM

China may no longer be the global growth engine, the one country that offset downturns elsewhere in the world and kept the global economy stable, experts say.

The country recently set a 2012 gross domestic product target at 7.5 percent, below normal targets of 8 percent and well below past actual growth rates of around 11 percent over the past decade.

Construction is cooling, housing especially.

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"The golden age of infrastructure investment is behind us now," Dong Tao, Credit Suisse chief economist for the Asia region, writes in a report, CNBC reports.

"The golden age of the housing boom is behind us now" too, along with the boom in exports, Tao adds.

China's once red hot economy propped up demand for goods and commodities from South America, other parts of Asia and elsewhere, which kept a good chunk of the world cushioned as the U.S. and Europe fell into recession.

Chinese stocks performed strongly as did stocks in U.S. companies like Caterpillar, which sold its famous earth-moving products to China amid the U.S. downturn.

Chinese Premier Wen Jiabao says the lower growth target reflects the need to improve the quality of the country's economy such as by boosting internal demand and not just relying on growth fueled by exports.

"The growth target indicates the lowest level that the government is comfortable with and is also a signal to local officials that they shouldn’t solely focus on the rate of expansion," says Michael Buchanan, chief Asia-Pacific economist at Goldman Sachs Group in Hong Kong, according to Bloomberg.

"China’s trend growth rate is coming down but it’s still higher than this — more like around 9 percent."

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