China's Economy: So Long to Fast Growth?

Posted by: Bruce Einhorn on November 6, 2008

As a business journalist writing about China, you sort of take it for granted that Chinese economy is unstoppable. Of course it’s the world’s fastest-growing country. Of course it has growth rates in the double digits. For China, that’s just normal.

Not anymore. A new report from Credit Suisse says the days of super-fast growth are gone. According to the Credit Suisse analysts, China’s economy is getting hammered by the global downturn and growth may be as low as 5.8% in the fourth quarter. While the Swiss bank expects things to pick up a bit in the second half of next year, it still estimates GDP growth for 2009 of just 7.2%. For China, which needs growh above 8% to create enough jobs for new entrants in the workforce, 7.2% means the country is in a recession.

And the outlook beyond 2009 isn’t much brighter, according to Credit Suisse. “In our view, this round of five consecutive 10%-plus yearly GDP growth…is over,” the analysts write. “We expect 3-5 years of sub-trend growth period….” There’s a chance the double-digit days could return, the analysts write; maybe increased demand from people in the Chinese countryside might power a new boom. For now, though, companies - both local and foreign - that have been pinning their hopes on making big profits from the booming Chinese economy may need to think again.

Reader Comments

peace4all1

November 7, 2008 3:32 PM

This might not be a very good news for Western Investors but I welcome this news for the sake of long-term benefits for Chinese people. During the heyday of double-digit growth, every caution was thrown out window. As a result of it, China gets stuck with one of the worst environmental problem and various product safety problems. Now it's the time to weed out those incompetent and bad, greedy vendors. By the same token, With fewer opprtunities those incmpetent officials can be weeded out too!

mark

November 7, 2008 9:58 PM

I have followed Credit Suisse's economy reportand forecast for quite a few years, and you know what? They were wrong everytime.

Wujunmin

November 8, 2008 11:38 PM

Change,we need.

China is Greedy

November 9, 2008 4:31 AM

China is too greedy to accumulate huge trade surplus. Such surplus is not sustainble. That's how the world bellied up. This will bite china in return.

China's growth

November 9, 2008 5:35 PM

Is China really the one to be blamed for being 'Greedy'?

Newbie

November 9, 2008 9:42 PM

Is anybody surprised? Not at all. It is a well known fact that the Chinese Government 'will not allow' the growth rate to fall below 7%. As they have been doing for years, they'll just fudge the numbers. After all statistics is the best form of lying.

In any case, China is an economy on steroids (FDI). And as we know steriods is the quickest way to success (ask Ben Johnson), but after a while things start falling apart. All the bad news is coming out of the box, as expected, after the Olympics.

jcage

November 10, 2008 2:33 PM

Newbie

The $1.9 Trillions that China has in foreign reserve is real and it can not achieve by fudging the number. The export and import quantity in $$$ can not be fudge since it could be double cross-checked with other countries that do business with China.
The number of patents and trademark that China is achieving every year can not be fudge and by now you should get my drift...

When China announce the stimulus package, the world stock market went up and when developed countries talking to include developing countries to help to fight the global recession, they are main referring to China and Russia!

We will see if India can survive this economic crisis since it would be difficult for many countries around the world such as China and the member of the G8 group!

Newbie

November 11, 2008 1:21 AM

Hey Jcage, Greetings.

Have you checked the stock prices in Asia (and US) today? They have tanked. So much for China's stimulus package. It shows how important China's economy is to the world's financial metldown.

I am so glad that when the developed countries talk about including developing countries they think about China and Russia, because these are the countries that will suffer most from the financial crisis.

China's $ 1.9 Trillion reserves are as real as proteins were in Chinese milk. Till tests proved that it was melamine. Haven't I said before, everything about China is fake until proven otherwise.

jcage

November 12, 2008 1:04 AM

@Newbie

Yes, I noticed how India stock was falling like a rock and it is over 55% of its peak and it will soon catch up with China stock market!

Russia and China both have the wherewithal to fight off this recession with their massive foreign reserve, economies and political clout to influence other countries!
India has not influence even around the subcontinent, Pakistan, Bangladesh, Burma, Nepal and Sri Lanka are all suspicious of India intention.
That is why India was not invited..

jcage

November 12, 2008 1:17 AM

@Newbie

This article is about China and not about India and do you you know why? India does not matter in this world recession so India input make not difference whatsoever and you know that I am right. The only reason the West prop India is because of China and the only reason India dare to aspire to be a better place is because India does not want to be left behind. You are a living proof of a insecure person crying to attention at every turn. You have my pity and understanding.
Have a nice day :-)

Newbie

November 12, 2008 9:04 AM

@Jcage,

Precisely, then why did you rake up India in your first post? I didn't.

Looks like China seems to be very scared of being overtaken. China of course has seen the level of Indian influence over its culture (through religion) which it is scared even to acknowledge.

Yes, India's stocks are falling, but China's is falling faster even with a so-called stimulus package.

As far as China having the wherewithal to fight, it seems you are living in an illusory world. Let China first fix a thing as simple as milk, then we will talk about the rest of the economy. Looks like the melamine in your milk has gotten into your brain.

jcage

November 13, 2008 1:12 AM

"Newbie
November 12, 2008 09:04 AM

@Jcage,

Precisely, then why did you rake up India in your first post? I didn't."

Indians always has been anti-Chinese and anti-Asian all the way from colonial time and their behavior throughout the years just confirm it!
They always like to cry to attention at any opportunity and especially they like to cry for attention when China is mentioned!

William

November 13, 2008 7:05 AM

LOL. That Newbie seems to be a very immature kid.

Jalal Alamgir

November 13, 2008 9:13 PM

A little bit of slowdown to 7 percent will be good for over-heated China.

2012

November 18, 2008 9:40 PM

@ Newbie

Another delusional self-hyping Indian says:

"Looks like China seems to be very scared of being overtaken."

If India is really that capable of overtaking China then prove it first then talk. Otherwise it's all too obvious that it's Indians who are the ones that are scared and insecure. All the irrational, jingoistic and generally nonsense posts by Indians such as you serves to reinforce that.

"China of course has seen the level of Indian influence over its culture (through religion) which it is scared even to acknowledge."

Stop talking nonsense. Buddhism may have originated in India but Confucism and Taoism are indigenous to China and the core values of Chinese culture come from the teachings of Confucius. Don't over-hype Indian importance. If India is so great in culture then why the hell are Indian institutions modelled after the British model?

"Yes, India's stocks are falling, but China's is falling faster even with a so-called stimulus package."

Chinese don't care what you Indians think. Why the hell you Indians are so interested in every move that China makes? Mind your own business and set your own untidy house in order.

"As far as China having the wherewithal to fight, it seems you are living in an illusory world.

HA!! Look whos talking. The dish calling the kettle black, so it seems. Indian economy will go belly up much much faster than China's, were all those foreign outsourced jobs in India to be pulled out. India doesn't have the tenacity to deal with such a severe challenge but you Indians are more interested in pointing fingers at China. How pathetic!! Living in fantasy and in total denial is something that you Indians excel in.

"Let China first fix a thing as simple as milk, then we will talk about the rest of the economy."

Let India fix something like making sure that all Indians get to eat atleast three meals everyday, then talk about China.

"Looks like the melamine in your milk "has gotten into your brain."

Looks like lack of food has degraded your brains ability to think rationally.

You Indians only post nonsense and never any plausible argument with compelling evidence to support your claims as to why you think India is better than China and why India will overtake China (if it ever will).

It seems that the sole reason for you Indians to post in blogs such as this is to disparige China just to make yourselves feel good about yourselves. Your childish jealousy and insecurity is laughable. With such a petty mindset you Indians hope to become superpower and overtake China. I DON'T THINK SO!!

Charles

November 25, 2008 9:41 PM

Well... the purpose of this blog has totally been changed....
i'm not chinese nor indian.. and i'm not here for arguments.. i'm here to present the facts..
My report favours india with datas available from WTO, chinese banks and United nations economic survey2007.. links at the bottom...

Let's talk abt the facts ..

1. china has an aging population.. the median age of chinese working population is 34 whereas the median age of indian workforce is 24 and this gap is still gonna increase..

2. 40% of chinese GDP relies on FDI and which according to the economists and the history of developed nations is not safe at all... yes... FDI is a steroid

3. 2003 shows 60% of non performing loans(NPL) in chinese banks and the banks been funded from the surplus package frm the government.. compared to 12% NPL in indian banks..

4. The whole world including chinese knows there's less innovation in china.. most of the products r a copy r replica.. (read the world bank report for facts)

5. Democracy has proven the better choice than socialism... refer to british , american , chinese and also ancient roman and egyptian history..

negative factor in indian growth is politics and the religious system. which is likely to b handled better by upcoming youths..

FACTS and Referrences:


1. http://www.deep-insight.net/why-india-will-overtake-china-in-the-economic-race/

2. http://www.deep-insight.net/india-will-overtake-china-in-the-economic-race-2/

3. http://devdata.worldbank.org/AAG/chn_aag.pdf

4.http://stat.wto.org/CountryProfile/WSDBCountryPFHome.aspx?Language=E

5. http://esa.un.org/unpp/index.asp?panel=3
3.

yasin malik

November 25, 2008 10:01 PM

India is an over-hyped windbag which is running out of air as the current global financial crisis has shown.

Charles

November 30, 2008 5:45 PM

Any1 here to provide facts....

I guess this is a discussion blog.. anythin relevant to the topic could b worthwhile... rather than givin a hype to each other's economy ... r pride..

Requesting no moron's in here plz..

jeff

December 16, 2008 4:52 AM

charles u are the moron here no matter how you wanna spin it, i tell you this.

there is no sin greater than the ability to bluff oneself and convince oneself otherwise.

Charles

December 22, 2008 8:03 PM

@Jeff
U should repeat that to urself boy...
Those r facts frm the world panel.. u can check it out frm the links provided.. R if u hav any othr proof fr ya contradiction give it out, i'll accept it with respect to the level of truth in it..
R else u can get the hell out boy..dont stress urself and plz dont bluff-out.. coz as u said it is a sin...lol

Post a comment

 

About

Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

BW Mall - Sponsored Links

Buy a link now!