According to the World Bank, the growth forecast for China has been lowered due to a weak demand for exports and lower investment growth. The bank is expecting China’s economy to grow by 7.7% this year, which is down from 8.2 %, as projected in the month of May.
Due to economic problems in China, exports from the country have been affected for the Euro zone as well as in the US, which are two of the biggest markets for China. On the other hand, policy makers have found it tough to boost domestic demand high enough to offset the decline in foreign sales.
The World Bank, in its latest report said, “China’s slowdown this year has been significant, and some fear it could still accelerate”. The global crisis in the year 2008 and 2009 had led China to unveil stimulus measures, which included record lending by state owned banks to maintain a high rate of growth.
The measures had helped to sustain growth, but they had also led to a sharp increase in property prices in the country, increasing fears about asset bubbles being formed. According to our sources, in order to tackle ongoing issues, policy makers have sought to reduce lending money in order to increase growth.