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China has rapidly grown to become the number two economy in the world. But with economic woes in Europe and the US, China is starting to feel the pinch as well. Here's the story.
For the first time in nearly three years, China's manufacturing sector is shrinking. As Europe and the US feel the pinch from the global economic recession, exports from China are decreasing. Chinese authorities are anxious to keep the economy expanding, and prevent growing unrest.
But it's a delicate balancing act. China has struggled to reel in massive inflation that came along with rapid economic growth. But as factories start cutting jobs and unrest starts to brew, authorities are trying to once again turn up the economic flames. In trying to balance the woes of rapid growth with the troubles of economic shrinkage, Vice Premier Wang Qishan best summed up China's position, "an unbalanced recovery is better than a balanced recession." That was from a talk at US trade negations last week.
Also suffering is China's real estate market. New home sales are declining in some of China's biggest cities. This has angered many homebuyers who bought when prices were at their highest, only to see the value of their property plummet.
Earlier in the week, regulations to curb bank loans that had been put in place to slow inflation were eased, in hopes that it would give the Chinese economy a boost.