China's economy is in transition from an industrial economy into a post industrial economy where both international and domestic markets can no longer support high speed growth of industrial sectors. China is facing the possibility of being trapped by "economic transition syndrome," which means a vicious cycle of weakening of internal driving force for growth, demand for stimulus policies and increasing financial fragility.
However, a tumble in the growth rate was nothing to be afraid of - if not to be welcomed to convey a sense of urgency to companies that they needed to change their way from low quality and low value-added production.It is easy to either keep piling up unsold products or to simply let unprofitable companies sink. It is much harder and riskier to try to strive for both growth and transition. But there is a bonus in doing so, because
The relatively high growth rates in some regions of the country where the local economies have just recently taken off or industrial restructuring is well underway also indicates that a fall in overall demand has yet to be seen.Therefore, the economic slowdown is mainly being caused by the structure of a manufacturing sector that is failing to meet the needs of the Chinese people, who have grown more affluent in recent years and naturally demand products and services of higher quality.
