News Summary: China cautious in face of slump

2008 IT ISN'T: Unlike 2008 when Beijing lavished massive public projects with money to spur growth, it appears that in this economic slowdown, economic policy makers are allowing the economy to follow its own path to better times. Beijing is avoiding an aggressive stimulus and sticking to small interest rate cuts and modest spending increases.

LESSONS LEARNED: The 2008 stimulus helped China emerge quickly from the global crisis but fueled inflation and a building frenzy that left some communities with underused highways, stadiums and other facilities and debt they might not be able to repay. Economists believe a repeat of the aggressive investments four years ago would do more harm than good.

CHINA TODAY: Forecasters initially expected China's falling growth rate to rebound as early as the first quarter of this year. That has been pushed back repeatedly by exposure to debt-plagued Europe and a sluggish U.S. recovery. July export growth fell to just 1 percent from the previous month's 11.3 percent. Consumer spending and factory output also weakened. Aanalysts expect a recovery late this year but say it will be too weak to drive global demand without support from Europe and the United States.

Source: http://news.yahoo.com/news-summary-china-cautious-face-slump-191903017--finance.html

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