JANUARY 22, 2009, 12:18 A.M. ET
China Fourth-Quarter GDP Confirms a Major Slowdown
http://online.wsj.com/article/SB123259051859504907.html?mod=testMod#articleTabs%3Darticle
By ANDREW BATSON
BEIJING -- China's government said the economy expanded 6.8% in the fourth quarter of 2008 from a year earlier, confirming a dramatic slowdown that has cut growth rates in the world's third-largest economy nearly in half in a single year.
The latest figure means full-year growth for 2008 was 9.0%, the National Bureau of Statistics said Thursday, marking the first time since 2002 that China's economy has expanded by less than 10% annually. It is a dramatic decline from 2007, when the economy roared ahead at a 13-year-high rate of 13% for the full year, according to revised figures issued last week.
China, whose economy is bigger than those of all but the U.S. and Japan, remains the fastest-growing of the major powers. But the abruptness of the recent slowdown has surprised almost all observers of the economy. The weakness has dimmed hopes that China would provide major support to the global economy at a time when the U.S., Europe and Japan are all in or near recession.
The current growth rate puts China in danger of falling below the government's longstanding annual target of 8.0%, and is likely to raise new concerns about job losses and the prospect of social unrest. Fourth quarter growth in gross domestic product, or the value of all goods and services produced in the economy, was slower than the already-weak 9.0% reported for the third quarter, and some economists expect growth could decelerate further this year.
China in 2005 revised the way it calculates GDP, but it hasn't issued a full range of new historical data, making precise comparisons of quarterly figures impossible.
While China's annual growth is still positive, millions of workers have lost their jobs in recent months. Rising unemployment and a series of resulting labor protests have fueled Chinese government concerns, although so far unrest has been isolated, and hasn't shaken the Communist Party's hold on power.
Most economists believe the worst is not yet over, though there could be some improvement by March as the impact of China's massive stimulus program takes hold. China's government has for the last several years announced an annual target of 8% growth, which it sees as a baseline for ensuring employment. While officials have repeatedly said they think 8% in 2009 is attainable, others have serious doubts. Some private economists predict growth will be as low as 5% this year.
"The international financial crisis is deepening and spreading, with continuing negative impacts on the domestic economy," Ma Jiantang, commissioner of the statistics bureau, said in a statement.
The government is taking aggressive measures to stimulate growth but is hampered by the fact that two of the major engines behind the recent boom -- housing and export manufacturing -- are sputtering at the same time. Earnings of Chinese exporters had already begun to slow when the U.S. went into recession in December 2007. But China's economic fortunes really began to deteriorate when its own housing bubble began to burst in the middle of 2008.
Write to Andrew Batson at andrew.batson@wsj.com
Printed in The Wall Street Journal, page A9
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