Irfan Hossain, 2007-2-10-101

Business Communication, BUS 231 (4)

Journal 5, 19 July 2009

DORMANT CHINESE ECONOMY RECOUPS

The ailing economies can take a breathe of relief as the Chinese economy grew 7.9% in the
second quarter of 2009. This growth marks an impressive flip-flop for the Asian powerhouse.
Due to the dormant global economy, GDP growth rate slashed to 6.1% in the first quarter. But
the economy recouped following the infusion of USD 580 billion by the Government of
China.

Prior to the global economic crisis China had been experiencing double digit growth from
2003 to 2007. China is now again back on track and aims to achieve its 8% growth rate for
this year, even though the financial crisis has hit crucial export sectors. Analysts have
forcasted that the improvement in the Chinese economy is likely to alter confidence in other
economies. China is the first big country to have made a come back which is giving hope that
the world economy is likely to stabilize, but analysts have cautioned that the positive
spillover effect will be limited to only those country’s that import heavily into China.

Experts predict that the economy will grow parallel to the government’s target of 8% but they
are still skeptic. Economists fear that there are many dangers and challenges that still lie
ahead. They referred to the struggling export sector and also the massive bank lending that
might result in inflation and asset price bubbles. The private sector has risen but the prime
cause of the growth is still the expansionary policy of the Central Government.

In June industrial output increased by 10.7%, while the first half of 2009 has marked a 7 %
growth. However China’s export has declined by 21.4% over the years. In the first half of
2009, government spending on infrastructure has increased by 33.6% in comparison to 2008.
Statistics Bureau has also concluded that investment in urban fixed assets marks a rise of
35.3%. Amidst mass investment CPI (Consumer Price Index), the main indicator of inflation
fell by 1.7% in June compared to same month a year before.