Furthermore, in China, it has been clearly observed that the government is placing a high priority on coping with structural problems, such as population-related issues and the excess capacity problem, rather than on pursuing strong economic growth. Thus, we should not expect the growth rate to recover noticeably for the time being (Chart 25).
The labor market is firm even though the annualized GDP growth rate is less than 8 percent, and this suggests that the potential growth rate in China is decreasing. Therefore, the Chinese authorities are concerned about inflation, even in a situation where the economic growth rate has not increased (Chart 26).