Growth for the world’s largest exporter hit its slowest pace in three years as demand for Chinese products waned in the U.S., Europe and elsewhere, prompting the country’s leaders to encourage investment with stimulus measures.
But analysts warned that China’s growth problems may not be solved by a simple injection of capital and a new round of government spending. Especially as many of today’s issues can be traced back to the way the country tried to kick start growth after the global financial crisis in 2008-2009.
At the time the central government began pumping huge amounts of money into the economy, mainly on infrastructure and construction spending.
This led to excess capacity, a surge in property prices and an increase in consumer costs and inflation.