Skip to content  China’s GDP Dilemma  April 13, 2012  With the
announcement that China GDP growth has slowed to 8.1%, the
unbridled demand for labor will also cool off. It’s a tricky
time for China as its previous strategy of pushing hard on the
gas pedal to grow GDP at any cost won’t work any longer. Now
China faces the challenge of growing its economy at moderate
pace.  It is already starting to drive differently to effect
this change. Currently China is now driving with two feet. One
foot is tapping the brakes (by curtailing construction) and one
foot is gently pressing the gas pedal (through the loosening of
credit by banks).  What other avenues can China pursue to grow
this now large country at a controllable pace?  There are many
levers that governments have used over the years. But in China’s
case, it has already pulled many of them as far as they can go.
Let’s take a look at a couple of those options and why they
won’t work in China right now:  Devalue its currency. As China
never let the Yuan rise in