16/04/2009 - 13:02

China growth slowest in 10 years

16/04/2009 - 13:02

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China's GDP growth has slowed to its lowest rate in almost 10 years, growing 6.1 per cent in the year to March, in further bad news for Australia's economy.

China growth slowest in 10 years

China's GDP growth has slowed to its lowest rate in almost 10 years, growing 6.1 per cent in the year to March, in further bad news for Australia's economy.

Just like other parts of the globe, activity in China "seemingly fell off a cliff" in late 2008 despite recently showing signs of recovery following the Chinese government's 4 trillion yuan ($815 billion) stimulus package, according to CommSec.

Commentary from CommSec said the March quarter looks to be the low point for the Chinese economy, despite latest figures on production, investment, and trade being encouraging, pointing to stronger growth, not just for China, but the Asian region.

The Chinese economy last grew at an annual pace of around 6 per cent at the time of the Asian crisis in the late 1990s, and this time around it has been the global financial crisis doing the damage, CommSec chief economist Craig James said in a statement.

"But just as Chinese authorities responded forcefully to the last slowdown, they are doing the same this time around with the early results looking positive," Mr James said.

"Focussing on the latest economic growth data is akin to looking in the rear-view mirror.

"While it is clear that China didn't escape the economic vortex generated by the US, it is clear that the authorities are being successful in rescuing the economy from being sucked under."

Just like the Australian government and Reserve Bank of Australia, Chinese authorities are acting aggressively to lift the economy.

Bank lending is now growing at a near 30 per cent annual rate and the fruits are starting to be borne in terms of new investment, Mr James said.

The only laggard is household spending, where the authorities may need to do more to get consumers spending again.

China's growth was 4.5 per cent lower than the first quarter of last year and down 0.7 per cent from the previous quarter and the country's real quarterly growth in the December quarter was estimated to be close to zero, with the March quarter looking very similar.

 

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