China's economic deceleration appears to be continuing. The country's gross domestic product grew by 6.7% year on year in the January-March 2016 quarter, the slowest growth since the January-March term of 2009, just after the Lehman shock of 2008. Any signs of problems in the Chinese economy are bound to have impacts on the world economy. The Chinese government should take steps to heighten growth potential for the medium to long term, such as an overhaul of state-owned enterprises.
Industrial production, which has long served as the main engine of growth, has shown slower increases amid the current supply glut. Shadows are also being cast over consumer spending, which is expected to be an alternative motive force. Construction investment and plant and equipment spending have picked up, due partly to an easing of rules on mortgage lending, but housing markets in major Chinese cities appear to be slightly overheated already. There is a limit to how much Chinese policymakers can rely on property development to boost overall business activity.
