A Review of China’s Economy in 2012

Abstract

In 2012, China’s GDP grew by 7.8 %, a decrease of 1.5 percentage points over the previous year. The worsening sovereign debt crisis in Europe and sluggish recovery in the U.S. economy had directly depressed external market demand for China. On the other hand, domestic excess production capacity in manufacturing sectors resulting from persisting high investment for decades, has reduced industrial investment, and in turn its output growth. The industrial output increased by 7.9 %, which was the lowest since 2000, a decrease of 2.5 percentage points over the previous year. At the meantime, as the consequence of tighten regulations, the output of the real estate sector only increased by 3.8 %, a decrease of 2.9 percentage points over last year. Inflation slowed down as well: CPI was 2.6 %, a decrease of 2.8 percentage points; and PPI was 1.7 %, a decrease of 7.7 percentage points (Fig. 1.1). From a long term perspective, a slow-down of China’s economy is an inevitable outcome of its unbalanced economic structure after China has enjoyed high economic growth over more than 30 years and thus has become one of the middle-income countries. At the moment, it is vital to deepen reform, to regulate economic structure and to create conditions for a further reform of the China’s economy and transformation of economic development pattern.