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Economy

China’s 7.5% Growth May Be Opportunity for People’s Republic Stimulus

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By Douglas A. McIntyre Updated Published
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China’s economy grew at 7.5% in the second quarter, compared to the same period last year. The government of the People’s Republic may not only use this rate as part of reform movements for local government debt problems. It may also cause a huge stimulus package like the one set in 2008, when the central government pushed more than $500 billion into the economy. The move might increase inflation, which is a constant worry within the world’s second largest nation by gross domestic product (GDP). It may also contribute to bubbles, which often include the increase in real estate prices. However, if such a stimulus were taken, it might prop up the activity of China’s middle-class consumers, which would help internal growth and support imports to both its businesses and these consumers.

According to Reuters:

So for now, economists do not see any major stimulus or policy shift and instead expect the government to tough out the slowdown as they pursue a longer-term vision of reforming the economy towards consumer-led, rather than export- and investment-led growth.

Beijing is still cleaning up trillions of dollars in local government debt left over from its last spending spree during the 2008/2009 global financial crisis, while trying to rein in off-balance-sheet loans.

Surviving the slowdown may not be an option. China’s factory workers are used to rising wages, and a drop in consumption could cause permanent damage to the activity necessary to move the nation’s GDP structure to one more like that of the United States.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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