China economy slumps as top party officials meet

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00:00It comes just once every five years.

00:03One of seven major government meetings held between Communist Party Congresses,

00:07China's third plenum is the one dedicated to economic policy,

00:12and this time around it has its work cut out.

00:15New data for April through June shows the country's economy grew

00:19by just seven-tenths of a percent over the previous quarter.

00:22And while GDP did grow by 4.7 percent on a yearly basis,

00:27Q2 marks a significant deceleration from the first quarter's 5.3 percent,

00:32and well below analysts' projections of 5.1 percent.

00:36Beijing acknowledging the challenges it faces.

00:40The external environment is intertwined and complex.

00:43Domestic effective demand remains insufficient

00:46and the foundation for sound economic recovery and growth still needs to be strengthened.

00:52Chinese shoppers are keeping their wallets closed

00:55as a severe downturn in the country's property market continues to weigh on consumer confidence.

01:00Retail sales growth hit just two percent in June.

01:04There's some pessimism.

01:06The desire to consume is diminishing.

01:08Everyone tends to manage their money a bit more strictly and to save more.

01:12In response, the government has fallen back on an old strategy,

01:16heavily subsidizing investment into new factories,

01:19as it aims to boost the economy via manufacturing.

01:23The resulting excess supply, though, has led to price wars on the domestic front,

01:27raising fears of deflation that would further reduce the value of investments

01:31and slow consumer spending.

01:33And while an export boom and a record trade surplus haven't made up for weak consumption,

01:39they have provoked tariffs and other protectionist policies abroad,

01:44as Western countries try to shield their industries from cheap Chinese imports.

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