China sees 3-year low growth, economists discuss rebound
BEIJING - The Associated Press
Two migrant workers rest in the shade while a man waits for his bus near an advertisement board showing a real estate project in the Chinese capital city of Beijing. AP photo
China’s economic growth slowed to a new three-year low, damping hopes it can make up for U.S. and European weakness, but analysts said a rebound might be in sight.
The world’s second-largest economy grew by 7.6 percent in the three months ending in June over a year earlier, down from the previous quarter’s 8.1 percent, data showed Friday. That was the lowest since the first quarter of 2009 during the depths of the global financial crisis.
China’s slowdown could have global repercussions, especially at a time when the United States and Europe are struggling. Lower Chinese demand could send shockwaves through Asian economies that supply industrial components to its vast manufacturing industry and exporters of oil, iron ore and other commodities such as Australia, Brazil and African nations.
Other indicators, though, including strong June bank lending, which is closely tied to business activity, suggest the low point of the decline might be past, analysts said.
“The Chinese economy has already bottomed out in the first two quarters,” said Xiao Li, an economist at Industrial Bank in Shanghai.
“It is not certain whether or not there will be a strong upward rebound. But at least the economic growth rate will stop coming down,” Xiao said.
The slump raises the threat of job losses and political tension. That comes at a politically difficult time for the ruling Communist Party, which is trying to enforce calm ahead of a planned once-a-decade handover of power to younger leaders.
China’s export growth has fallen steadily and consumer spending has weakened despite stimulus measures that include two interest rate cuts since the start of June. The government also is pumping money into the economy through higher investment by state-owned industry and more spending on low-cost housing and other public works.
Quarterly growth was in line with the government’s official target of 7.5 percent for the year, which private-sector forecasters say China still is likely to achieve.
“The growth rate of 7.6 percent is already an achievement because the economic situation facing China has been complex and severe,” said Sheng Laiyun, a government spokesman, at a news conference. “We have seen tepid domestic and external demand.”
Sheng rejected suggestions by some analysts that the slowdown might be deeper than reported and that Beijing ordered companies to make the economy look healthier by inflating data on electric power consumption, a key industrial indicator.
“I want to say right here they are wrong,” Sheng said.
China’s rapid economic growth has decelerated steadily for eight quarters, the longest slowdown since the government began reporting such data in 1992, according Yu Bin, a Cabinet researcher. He said the previous record was six quarters.