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Jan. 22 – China’s National Bureau of Statistics announced that gross domestic product (GDP) grew by 9 percent to RMB30.067 trillion in 2008.
This is the first time since 2003 that China reported less than double-digit growth and is the slowest growth since 2001, when GDP rate was 8.3 percent.
China’s exports have been pummeled by the global recession and forced the government to spend more and implement tax cuts. In the last quarter of 2008, GDP expanded by 6.8 percent in contrast to a 9 percent gain in the previous quarter.
The government will need to keep to maintain an 8 percent GDP rate for this year to provide jobs for migrant workers and graduating students. A figure less than 8 percent may pose as a threat to Communist Party rule when the slowing economy festers more cases of civil unrest.
“The international financial crisis is deepening and spreading, while its negative impact on domestic economy is continuing,” said Ma Jiantang, director of the NBS, said during a press conference.
According to Bloomberg, Premier Wen Jiabao said this week that the government must work urgently this quarter to reverse the slowdown and maintain social stability amid a “very grim” outlook for jobs.
The Chinese government is doing everything it can to stave off the slowdown. It has already asked state-owned banks to boost lending, released a RMB4 trillion stimulus plan, decrease export taxes in addition to extending support to its top 10 industries.
I think its hilarious most press are talking China down when other economies are crashing. US is in negative growth, the EU 1.5% if they’re lucky, and China “crashes” to 9%. That may be less than 2007 and 2009 will be less than that, however which ever way you look at it, China is doing a whole lot better than most other economies. I appreciate you not getting snarled up in the “doom & gloom” knee jerk reporting on China other people seem tempted to comment on. While the US and the EU sink, China is still sailing on – not as fast as before, but still growing and still progressing. You have hit it on the head – it’s growth, not recession in China.
Given the special character of China economy, 8% is the bottomline, which is considered as the threthhold between recession or expansion (I guess). Outlooks for 2009 are really depressing.
“Crisis? Downturn? Where are the mounted barbarians burning and looting? The granaries are full. The commoners have meat, even on non-festival days. Taxes are light, and officials needn’t fear the treachery of malevolent eunuchs. Stop whimpering and bow to the heavens for your good fortune!”
These are slightly different things. 8% growth is considered the minimum target by the Government required to allow China to absorb new workers coming into the market and preserve social security and civil order. Less than that and unemployment rises.
However, economically, 8% or even 5 or 6% is still a decent figure for the economy to expand by in purely business economic terms. Compared with the US and Europe with minimal growth for 2009, international executives looking to earn a return on their investment dollars may well still choose China for FDI.
China’s quandary is that it socially requires a figure of 8% or more to maintain social discipline, however investing businesses globally would be happy right now with a 5-6% return. The two sides have different needs; one social, the other economic.
Opps, forgot reference to quote above – Yongle Emperor, as quoted in ‘Remembrance of Chinese Downturns Past’ article.
Is this the underlying approach from the Beijing government?
Michael – 8% is the generally accepted wisdom that China needs to achieve in order to avoid social problems related to unemployment, and is often referred to as such by the NDRC (National Development & Reform Commission). Nice quote incidentally.