It might not seem surprising, but China’s economy may be performing more poorly than at any time in half a generation.
Of course, “poorly” is a relative term. China’s economy is still growing. But its sharp slowdown is certainly noticeable to the citizenry
And it has been sharp. China’s economy grew at a sizzling pace of 13 percent in 2007. Earlier today, the National Bureau of Statistics said growth in 2008 slowed to 9 percent.
But it also noted that the last quarter, growth stalled out at 6.8 percent, its lowest rate of growth in seven years. So over the past year or so, there’s been a swing of 6 percent. That’s a pretty big hit. When you jog on a treadmill, then you slow to a walk, you feel it.
In fact, China may not even be moving ahead. It might briefly be walking in place.
A Citicorp report titled China Economic Flash just came in over the electronic transom and contains this interesting tidbit about the October-December quarter:
“After seasonal adjustment, we estimate that real GDP growth was -0.3 percent (annualized) compared to the previous quarter, the first contraction in at least 16 years,” it says.
Hmm. No wonder China’s leaders are busily priming the pump. After all, sustained economic growth is the pillar of their legitimacy. At the news conference today, Statistics Bureau chief Ma Jiantian suggested five percent of all migrant workers had already lost their jobs. That could mean more than 10 million people.
Item: Here’s a link to a story I filed recently on how overburdened the rail system is during this Lunar New Year holiday period.
Worst case predictions place 2009 growth at around 4.5%. While this certainly does not reflect the momentum they've had over the past five years, the "worst case scenario" isn't that bad at all once it's put into perspective (That's a lot better than the rest of the world, right?) While the migrant issue is indeed an issue, China is attracting highly-skilled international professionals like bees to honey. The economy sucks, and it sucks just about everywhere. But, I'd be willing to bet that China comes out ahead in the end.
Posted by: Aimee | January 22, 2009 at 10:21 PM
Tim,
Is it me or you were grinning when writing this one? I am sensing at least a little schafenfreude.
"Hmm. No wonder China’s leaders are busily priming the pump. After all, sustained economic growth is the pillar of their legitimacy. "
I wonder when you western journalists will get sick and tired of repeating this line over and over again. While economic growth is extremely important, I wouldn't say without it the CCP loses its legitimacy. There are many out there who understand for the country and for themselves the CCP is the best chance they have got right now.
Posted by: Pffefer | January 22, 2009 at 04:17 PM