China is the world’s second largest economy, but is unique in that it is still very largely a command economy, responding to the imperatives of the ruling Communist party. This gives China more room for manoeuvre than any of her major competitors. China has enjoyed many years of economic growth which would be the envy of any leading industrialised country – but then again it has a population of 1.35 billion, making it the most populace nation in the world. It is also the fourth largest country in the world by area.
Faced with reduced economic growth due, largely, to relatively weak global demand for Chinese exports as the rest of the world struggles to shake off the hangover from the Global Financial Crisis, China is taking fresh steps to boost its economy. Measures announced include new infrastructure projects along the Yangtze River – roads, railways and airports – aimed to enhance links between Shanghai and less developed provinces. In parallel, the central bank will push banks to bolster lending to exporters, producing, it’s hoped, a fillip to exports.
China has sought to tap in to domestic demand as a means to ensure sustainable growth, but that requires that the Chinese have the disposable income to enable a boost in consumption. Whilst some have become incredibly wealthy as China has flirted with capitalism, it is evident that many have yet to see any benefit from it themselves.
China’s growth has “slowed” from 7.7% in Q4 2013 to “just” 7.4% in Q1 of this year. There is concern that as China rebalances its economy from export driven to having a larger domestic demand component that growth will slow. This explains why the central government is fostering growth through expenditure on infrastructure products, perhaps. The State Cabinet told the Xinhau news agency that: "Better use of the so-called 'golden waterway' can boost economic integration between developed and impoverished regions and inject fresh energy into China's economic growth.” The 11 provinces and their municipalities adjacent to the river are estimated to account for 41% of the nation’s GDP.