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China’s Economic Growth Falls to Single Digits in 3Q

Posted October. 21, 2008 09:32,   


China’s sputtering economy saw growth slip into single digits in the third quarter for the first time in five years.

China`s National Bureau of Statistics announced yesterday third-quarter growth of nine percent and 9.9 percent growth for the first three quarters of the year.

China`s economy has seen double-digit growth since 2003, but the growth rate in the third quarter dropped to below 10 percent for the first time since the first quarter of 2006.

Economic expansion also slipped for the fifth quarter in a row since the second quarter last year.

The decline in third quarter growth was expected amid the global economic slowdown stemming from the financial crisis and reduced export growth arising from the stronger Chinese currency.

The third-quarter figure was below the previous quarterly forecast of 9.7 percent. Experts say the significant fall indicates that along with wage hikes provided for under a new labor law that took effect this year, China’s real economy is suffering more than expected.

The spokesman for China’s statistics bureau, Li Xiaochao, said, “Due to volatile factors in the international economic climate, exports in the first three quarters of this year contributed 1.2 percentage points to GDP growth, down 1.2 percent from last year.”

Many experts say Chinese growth is likely to fall further to the eight-percent range next year. The consumer price index cooled to a 4.6 percent, falling for the fifth consecutive month.

The slowdown in inflation, however, is expected to allow the Chinese government to use more aggressive policies to jumpstart the economy and boost stock markets.

In the same vein, Beijing established countermeasures to beef up the economy prior to the announcement of the economic statistics.

Chinese Premier Wen Jiabao held a meeting of the State Council Friday on measures to boost the Chinese economy and domestic consumption, the official Xinhua news agency said.

Under this plan, state loans will go to small and medium-size companies and the value-added tax will be cut for clothing, textiles and electricity.

Furthermore, the restoration of quake-stricken areas will be sped up and more investment will go to building infrastructure in agriculture, irrigation, energy and other sectors.

In particular, the Chinese government came up with measures to raise housing ownership and shore up the sluggish real estate market, including tax cuts for housing transactions and an increase in residential construction.

The Hong Kong daily Ming Pao said, “Inflation control used to be the top priority earlier this year, but is now behind stimulation of domestic consumption.”

Vice Housing and Urban-rural Planning Minister Qiu Baoxing virtually confirmed the measure to revive property markets by provincial governments, saying, “Due to the different conditions of the property sector, each city can be allowed to pursue its own real estate policies.”