China's high-octane economy shifts into slower gear
SHANGHAI, China (AP) - Some economists are calling it a "soft landing.'' Others, no landing at all.
China expects to record economic growth of at least 9 percent this year and, according to many forecasts, will see only a slightly lower rate in 2005.
The local economy of Shanghai, China's bustling, designer-clad business capital, is growing even faster, with a 13th straight year of double-digit growth predicted for this year.
The government in Beijing is attempting to rein in the expansion of the world's fastest-growing major economy to more sustainable levels by boosting interest rates and changing other policies.
But booming trade, investment and domestic spending ensure that China will remain a major engine of growth.
"This is what we've been describing as 'no landing,' " says Andy Rothman, China strategist in Shanghai for CLSA Emerging Markets.
"Growth is slowing a bit, but down to what is still a very rapid pace.''
Increasingly affluent Chinese are spending more than ever on computers, entertainment, clothing and tourism.
A recent AC Nielsen Consumer Confidence Survey found the Chinese to be the most optimistic consumers among 28 markets studied, with 78 percent of those questioned expecting to be better off next year.
With the economy apparently steaming ahead under its own momentum, Beijing has dropped its policy of creating jobs by shoveling money into construction and other projects.
In addition to raising interest rates, Communist leaders have ordered energy-saving measures and told local officials to cut spending on pointless prestige projects and unneeded factories, roads and other facilities.
Those policies reflect a recognition that, caught between shortages of energy, steel and other resources and already severe environmental damage, even high-octane China faces limits to its growth.
"There's no such thing as an eternal feast,'' the old Chinese saying goes.
China already consumes a third of the world's steel output, 40 percent of all cement and about a third of all coal.
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