The conventional view of China as an export-dependent, outbound-oriented economy needs to be adapted to a changing reality. Economic growth is increasingly coming from within, making China into an increasingly self-propelling economic player. There’s a number of indicators supporting this change of economic pattern. While the traditional markets of ‘China Inc.’ are deteriorating due to the economic crisis, domestic retail sales grew by almost 16 percent in March year-on-year, and domestically bound cargo traffic trough ports is increasing. Rather than from the traditional economic powerhouses of the Yangtze and Pearl river deltas, most robust consumer spending growth is increasingly coming from inland and lower-tier cities.
China has outpaced the United States in building more efficient, less polluting coal power plants. While China, which holds the world’s third-largest coal reserves, continues to use more coal than the U.S., Europe and Japan combined, it has emerged in the last two years as the world’s leading driver in cleaner coal-fired power plants. With China as the world’s largest emitter of greenhouse gases, this new development comes as an important step towards reducing global warming. The International Energy Agency recently lowered its forecast for China’s annual increase in greenhouse gas emissions to 3 percent from 3.2 percent. While high-specification emission control systems, advanced equipment and more efficient technology are increasingly used throughout China, there is still a large number of inefficient and outdated coal-fired power plants in use. More than half of the country’s coal power plants do not have the control equipment to remove sulfur compounds that cause acid rain, and only 60 percent of new plants being built are equipped with newer, more efficient technology.
China continued the trend of falling prices for the third month in April, with deflation reaching 1.5 percent as compared to last year. In March prices declined 1.2 percent year-on-year. Analysts expect the deflationary trend to continue in the next few months, but forecast a return to inflation later this year, identifying the strong fiscal stimulus, aggressive bank lending and loose monetary policy as the main drivers of the change.
