China’s Economic Growth

railwaysThroughout 2015, China encountered a deceleration in its economic growth. However, even with this, it still boosted its investment in railways last year. $126 billion was spent on rail projects throughout 2015, resulting in 9,000 kilometers of new track into operation. Thus today, there are 19,000 kilometers of high speed rail in China. According to the China Railways Corporation these figures matched the annual targets.

So while fixed asset investment accelerated 10.2% year over year (down from 13.9% at the beginning of the year), railway construction projects – in comparison – really encountered a significant expansion. It is hoped that this year, China’s GDP will grow 6.5 percent, down from the 6.9% figure of 2015’s last quarter.

In an effort to enhance the growth of the nation, it has been suggested that focus should move away from the “export-led model” and toward “more sustainable, domestic consumption-led growth.” According to head of China/Hong Kong Strategy for Hong Kong-based brokerage CLSA, Francis Cheung, “China will go from a high growth rate to slower or more sustainable growth rate. It at least will take two to three years for the economy to be on the stable growth path. Unfortunately, that’s not good for the market. There will still be a volatile market in 2016.”

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