CHINA´S FLAW
New figures show that China’s GDP growth fell to 6.8% in the year to the fourth quarter, down from 9% in the third quarter and half its 13% pace in 2007. Growth of 6.8% may still sound pretty robust, but it implies that growth was virtually zero on a seasonally adjusted basis in the fourth quarter.
Industrial production has slowed even more sharply, growing by only 5.7% in the 12 months to December, compared with an 18% pace in late 2007. Thousands of factories have closed and millions of migrant workers have already lost their jobs. But there could be worse to come. Chinese exports are likely to drop further in coming months as world demand shrinks. Some, forecast that exports in the first quarter could be 19% lower than a year ago. 2009 may well see the first full-year decline in exports in more than a quarter of a century.
Economists have become gloomier about China’s prospects, with many now predicting GDP growth of only 5-6% in 2009, the lowest for almost two decades. The most dismal view comes from Albert Edwards, from SG , who thinks China may be sliding into outright recession. He points to a fall in electricity output of 6% in the year to the fourth quarter, down from average annual growth of 15% over the previous five years.
Alejandro Umbert Said,
January 24, 2009 @ 4:36 pm
No economy seems to be recession-proof… I read that China has launched an ambitious stimulus plan to revive growth in 2009, but like other similar plans it will take time until we see the reults.
Its great dependence on exports to Europe and the U.S. have become a burden too heavy to bear; other economies in the area are greatly affected as well and only a coordinated effort between them will have a positive effect on the economy.
Change is coming!