Local conditions put breaks on growth

Chinese economic data has been weakening in recent months and many private companies are struggling just to keep their doors open. While many are quick to pin the slowing domestic economy on financial woes in the US or sovereign debt problems in Europe, China's flagging growth picture can also be traced to several factors within its own boarders.

First of all, rising minimum wages across the country have pushed up labor costs and pinched the earnings of manufacturers. Second, corporate tax burdens continue to grow larger every year. Third, the majority of business polices and regulations in China are geared toward helping State-owned companies rather than the private sector. Fourth, domestic consumption still accounts for a relatively small proportion of China's economy and as soon as external demand fades the country will feel a major slowdown.