China’s economy has faced downward pressure over the past six months. The manufacturing sector is suffering particularly badly, and there are concerns that capital is flowing from the real economy into the virtual economy. But, Xinhua claims, China's economic fundamentals are still strong, making worries unnecessary.
With the booming real estate market and high returns in some financial schemes, private capital isn't interested in the real economy. That puts enterprises under huge pressure as the country is deleveraging, cutting excessive capacity, and regulating bank loans.
Those problems show Chinese manufacturing is dangerously weak as costs are increasing, Lin Zhongqin, president of Shanghai Jiao Tong University, said, warning that the sector cannot neglect risks from structural imbalance, particularly when under the downward economic pressure.
Xin Guobin, vice-minister of industry and information technology, noted that the current economic worries should force China to recognize its gap with developed countries in terms of product quality, technology and clean energy. But Xin stressed that the obstacles shouldn't be exaggerated since China's fundamentals are still strong and many manufacturers are turning cost pressures into a drive to transition.
Although China’s manufacturing is struggling at the moment, the trend is heading in a promising direction given constant innovation, Zuo Shiquan, director of the Equipment Industry Institute at the China Center for Information Industry Development, argued.