After leaders visit the country’s economic strongholds, they meet this week to decide how to cope with yuan and help exports. China’s model of development based on indiscriminate use of human and natural resources is in crisis, but no easy alternative is on the horizon.

Beijing (AsiaNews/Agencies) – The Politburo will meet this week to consider steps to take in response to current economic problems like slowing growth, rising inflation and, in particular, a dramatic decline in exports as the global economy slows. The meeting was set up after all the most senior leaders completed fact-finding missions to economic strongholds and key export bases.

President Hu Jintao has returned to Beijing after a tour of Shandong; Prime Minister Wen Jiabao completed a trip to Guangdong, Zhejiang, Jiangsu and Shanghai, whilst others visited coastal provinces.

The economy slowed to 10.1 per cent in the second quarter, the lowest level in recent years, as the producer price index hit 8.8 per cent in June.

The most dynamic growth engines have been hit badly as a result of curbs on lending and exports of low-energy-efficient and high-pollution products—problems compounded by a stronger yuan and higher labour costs.

The whole model of development based on indiscriminate use of natural resources and cheap migrant labour favoured by an artificially low yuan is in crisis.

Now many foreign and Hong Kong investors are threatening to shut down plants in Guangdong and other areas to move them to provinces with cheaper labour costs.

Policy makers are expected to discuss how to slow the yuan's appreciation and help exporters.

However, even this could help output it might also ignite inflation, which the authorities are finding hard to control despite policies setting food and energy prices.

For analysts, the problem is compounded by the Communist Party’s ‘top-down’ approach. For them the focus should not only be economic growth but should aim instead at developing the country’s social forces.

The Olympic Games, which start in two weeks time, will also be on the table for discussion.

Beijing’s gross domestic product grew 11 per cent year on year, faster than the nation's 10.4 per cent first-half rise, also ahead of the country's financial hub, Shanghai (10.3 per cent).

Everyone agrees that the Olympics are the reason for the boom and that starting in September the capital's growth rate should slow down.

• china
• beijing
• olympics
• politburo
• economic
• growth
• inflation
• yuan
• appreciation