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The World Bank and others have warned Beijing needs to scale down the dominance of state companies in a wide array of industries and promote free-market competition to keep incomes growing and avoid financial problems. Analysts expect Chinese leaders to move more cautiously than they
did in response to the 2008 crisis. Then, a 4 trillion yuan ($586 billion) stimulus helped China rebound quickly but fueled inflation and a wasteful building boom. The government has avoided talk of a possible new stimulus, instead stressing targeted measures such as spending more to build low-income housing. Real estate is traditionally a key driver of Chinese growth, pumping money into construction and other industries, but Chinese leaders have vowed to enforce curbs imposed to rein in surging housing costs. The Cabinet promised to support solar power, energy-saving products and affordable housing but gave no financial targets. "The government is now ramping up its stimulus but the impact will come too late to stop this quarter's GDP growth rate falling further," said Capital Economics analysts Mark Williams and Qinwei Wang in a report.
[Associated
Press;
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