Chinese President Hu Jintao (胡錦濤) said a slowdown in exports is putting downward pressure on the world’s second-biggest economy, and he pledged to boost domestic demand and promote more balanced growth.
“Economic growth is facing notable downward pressure, some small and medium enterprises are facing a hard time and exporters are facing more difficulties,” Hu said yesterday at the APEC CEO summit in Vladivostok, Russia.
“We have an arduous task of creating jobs for new entrants to the labor force,” he said.
The slowdown is increasing pressure on Hu as China tries to ensure a smooth transition of power to a new generation of leaders at a once-in-a-decade Chinese Communist Party Congress this year. Europe’s debt crisis and anemic US growth may hinder a rebound in exports, while at home a slump in earnings is deterring companies from spending and banks face rising debts.
Asia’s biggest economy expanded 7.6 percent in the second quarter from a year earlier, the slowest pace in three years, after the government moved to counter inflation and surging property prices after its 2009 stimulus.
Exports in July rose 1 percent from a year earlier and shipments in the first seven months rose 7.8 percent, compared with a 23.4 percent rise in the same period last year.
UBS AG and ING Groep NV on Friday cut their full-year forecasts for economic expansion to 7.5 percent, which would be the slowest pace in 22 years.
“They’ve screamed from the rooftops for three years they are trying to slow things down to kill inflation and to kill the property bubble,” said Jim Rogers, chairman of Singapore-based Rogers Holdings, an interview in Vladivostok on Friday. “Now it’s happened.”
The deceleration in China’s economic growth will probably extend into a seventh quarter, with ING estimating a slowdown to 7.1 percent and Bank of America Merrill Lynch projecting 7.4 percent for the three months ending this month.
Data due today may show industrial output growth slowed to 9 percent last month from a year earlier, the slowest pace this year, according to the median estimate in a Bloomberg News survey of 35 economists. Exports last month probably rose 2.9 percent from a year earlier, according to a separate survey before tomorrow’s report. Overseas shipments climbed 24.5 percent in August last year.
Hu said China’s economy was characterized by a “lack of balance, coordination and sustainability” and that the country would promote “inclusive growth” to improve people’s lives.
China’s Gini coefficient, a measure of inequality, has risen more than any other Asian economy in the past two decades, Murtaza Syed, the IMF’s resident representative in Beijing, said in February.
The government has not released an overall Gini figure since 2000, although ousted former Chongqing Communist Party secretary Bo Xilai (薄熙來) said in March it had exceeded 0.46, above the point that triggers social unrest.
“The route we’ve taken is to allow a portion of the population to grow wealth before everyone else,” China Construction Bank Corp (中國建設銀行) chairman Wang Hongzhang (王洪章) said in a panel discussion at the APEC summit yesterday. “By 2050, we hope to have a society where a large part of the population can share in that equitably.”
Hu’s standing with international investors has suffered ahead of the leadership change later this year. In a quarterly Bloomberg Global Poll published on Friday, two in five voiced pessimism about the impact of his policies on the investment climate in China. That was up from less than one in three in May and is the highest negative reading since the poll began asking that question two years ago.