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Pacific Basin Notes
Some commentators have questioned whether China's economy slowed more in 2012 than official gross domestic product figures indicate. However, the 2012 reported output and industrial production figures are consistent both with alternative Chinese indicators of the country's economic activity, such as electricity production, and trade volume measures reported by non-Chinese sources. These alternative domestic and foreign sources provide no evidence that China's economic growth was slower than official data indicate.
China prohibits its private sector from freely trading foreign assets and tightly manages currency exchange rates. In the wake of the recent global financial crisis, interest rates on China's foreign assets fell sharply, while yields on Chinese domestic assets remained relatively high, posing a challenge for China's monetary policy. Opening the capital account would improve China's capacity to weather external shocks, such as sudden declines in foreign interest rates. However, allowing the exchange rate to float without removing capital controls is less effective.
Many analysts have predicted that a Chinese economic slowdown is inevitable because the country is approaching the per capita income at which growth in other countries began to decelerate. However, China may escape such a slowdown because of its uneven development. An analysis based on episodes of rapid expansion in four other Asian countries suggests that growth in China's more developed provinces may slow to 5.5% by the close of the decade. But growth in the country's less-developed provinces is expected to run at a robust 7.5% pace.
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Economic Developments in the Pacific Basin
Trade Balance Between US and China
Economic Developments in Pacific Basin
||US Trade Balance
|*Inflation numbers are for 2013:Q1|
A joint program of CPBS and the Country Analysis Unit, designed as a gateway to information on Asia produced by the Federal Reserve Bank of San Francisco.