China’s economy feels chill from global crisis

The laid-off factory workers and slumping car sales indicated China‘s booming economy had no immunity from the global meltdown. New figures confirm it: China’s economy is still growing, but at the slowest pace in five years.


The National Statistics Bureau said Monday that China’s economy expanded by just 9 percent in the third quarter. That marks the slowest rate since the second quarter of 2003, when the outbreak of Severe Acute Respiratory Syndrome, or SARS, cooled growth to 6.7 percent.

In comparison, China realized 10.6 percent growth in the first quarter and 10.1 percent in the second quarter.

Two workers cycle through piles of steel materials at a port ... 
Two workers cycle through piles of steel materials at a port in Yingkou, northeast China’s Liaoning province, Monday, Oct. 20, 2008. China’s economic growth slowed to a still-robust 9 percent in the third quarter of this year, prompting leaders to pledge new measures to counter the economic slowdown and cushion the impact from the global credit crisis.
(AP Photo)

After years of feeding a voracious global appetite for its exports, China is seeing demand dry up as consumers in the U.S. and Europe cut back on spending in the wake of the mortgage-debt meltdown. The shift is a serious challenge for Beijing leaders as they struggle to keep job-creating growth on an even keel.

Protests by laid-off workers demanding their paychecks have already erupted as thousands of factories fold under the pressure of rising costs and slowing orders. Affluent city dwellers are feeling the pinch of sinking share prices and a weak housing market — sales of passenger cars fell 6.2 percent in August from a year earlier, according to the China Association of Automobile Manufacturers.

“The growth rate of the world economy has slowed down noticeably. There are more uncertain and volatile factors in the international economic climate,” National Statistics Bureau spokesman Li Xiaochao said in a nationally televised news conference.

“All these factors have started to release their negative impact on China’s economy,” Li said.

Exports have just begun to slow — the trade surplus hit a monthly record $29.3 billion in September as costs for imports eased thanks to lower prices for crude oil and other commodities.

A weaker China spells trouble for other Asian countries that have thrived on robust sales of raw materials and other manufacturing inputs to their giant neighbor.

“The problem is that China’s economic growth is slowing down when it is most needed,” said Huainan Zhao, a banking expert at Cass Business School in London.

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