How Bad is China's Economic Slowdown?

How Bad is China's Economic Slowdown?

Tuesday was another nervy day on Wall Street: the Dow closed down almost four hundred and seventy points, or about three per cent. The immediate issue, once again, was China, which by some measures is now the world’s second-largest economy. In Beijing, the government released a set of figures indicating that output from the country’s enormous manufacturing sector is declining. Another new statistic showed that the Chinese services sector, which has been growing pretty strongly, is now exhibiting some weakness, too.

At least two interpretations of the data are possible. The optimistic reading is that several one-off factors, including the temporary shuttering of factories in northern China to relieve pollution in Beijing, depressed the manufacturing figures, which should rebound in the months ahead and reassure the markets. Recently, the government has taken a number of policy measures to bolster demand, such as accelerating infrastructure projects, lowering interest rates, and devaluing the Chinese currency. Over the weekend, Li Keqiang, the Chinese Premier, said that these measures were already having an effect, and he assured the citizenry that the government, in order to meet its objective of seven per cent annual G.D.P. growth, would do more if necessary.

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