China economy grows at slowest pace in 5 years

Staff Writer
Columbus CEO

BEIJING (AP) — China's economic growth waned to 7.3 percent last quarter, the lowest rate since early 2009, resuming a slowdown that had been eased by mini-stimulus measures earlier in the year.

The third quarter figures, released Tuesday, put China on course for annual growth somewhat lower than the 7.5 percent targeted by Chinese leaders. The world's No. 2 economy grew 7.5 percent from a year earlier in the previous quarter and 7.4 percent in the first quarter.

Communist leaders are trying to steer China toward growth based on domestic consumption instead of over reliance on trade and investment, but the slowdown raises fears of politically dangerous job losses.

However, employment has remained strong and the service industries that leaders want to promote have done well this year despite the downturn, which has been focused largely in the property market, said economist Julian Evans-Pritchard of Capital Economics.

"There is still a lot of downward pressure on the economy," Evans-Pritchard said. Spending on infrastructure shored up growth in the second quarter but "once that fizzled out, the downward pressure has returned."

Chinese growth reached 14 percent in 2007, but took a hit from the global recession of 2008-2009 and has declined steadily since 2012.

The International Monetary Fund said in July that China should lower its growth target to no more than 7 percent for next year, but some analysts expect an even deeper decline, to as low as 6.8 percent.

That would be stronger than the United States, Japan or Europe, but it would be China's weakest annual growth in two decades.

A slowdown in the world's second-biggest economy would likely also cause some damage to the U.S. economy, the world's largest. Mark Zandi, chief economist at Moody's Analytics, estimates that each 1 percentage point drop in China's economic growth shaves 0.2 percentage point from annual U.S. growth — equal to the effect of a $20-a-barrel increase in oil prices,

On Monday, the Conference Board, a New York-based research group, predicted that China's economic growth would decelerate to 4 percent a year between 2020 to 2025 — well below widespread expectations of steady 7 percent to 8 percent growth over the next decade.