BEIJING August 15, 2012, 05:17 am ET
BEIJING (AP) — Summer should be the busy season for Shen Lin's musical instrument workshop in the southwestern city of Kunming. But her monthly sales of traditional wooden flutes are dwindling as China's economy slows, with no sign of a widely anticipated rebound in sight.
"I have less for my workers to do, which means they are paid less. They complain, but I have no choice," said Shen, who runs the company with her husband. "I don't know when things will improve."
China's economic recovery is taking longer than expected. But facing a collapse in export growth and weak consumer spending, Beijing is avoiding an aggressive stimulus and sticking to a gradual strategy of small interest rate cuts and modest spending increases.
A repeat of China's huge stimulus in response to the 2008 crisis, based on a government-led flood of investment, could push up overall growth. But it would set back efforts to nurture a self-sustaining expansion based on domestic consumption, reducing reliance on exports and investment in a shift economists say is needed to keep incomes and living standards rising.
The 2008 stimulus helped China emerge quickly from the global crisis but fueled inflation and a building frenzy that left some communities with underused highways, stadiums and other facilities and debt they might not be able to repay.
"The government isn't sitting on its hands. It has been acting," said Capital Economics analyst Mark Williams. "People remember what happened in 2008, and obviously compared to that, it seems like a pretty lackluster reaction. But a re-run of that would do more harm than good."
Read more at NPR
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