China’s boom ends as investment, exports, manufacturing fall

BEIJING – A top Chinese government economist confirmed Thursday what a slew of recent economic data had already shown — that China’s long-booming economy has slowed dramatically, and the era of double-digit growth is now officially a thing of the past.

“We believe China is nearing the end of the period of high economic growth,” said Yu Bin, director general of macroeconomic research for the ruling State Council’s research center. “What we need is moderate and reasonable economic growth.”

The slowdown here, although not a surprise to economists who have been studying recent statistics, nonetheless comes as another body blow to a global economy already in crisis, with some countries, particularly in Europe, facing the possibility of a double-dip recession.

China had been seen as a possible engine for re-starting the global economy, a role it played to some extent three years ago, when strong growth here — backed by a $586 billion stimulus program — helped the world avert the worst of the global recession.

Managing the slowdown presents China’s Communist Party rulers with a difficult challenge.  Since China liberalized its economy and opened to the world in 1979, its leaders have operated under an unspoken compact; they delivered spectacular double-digit growth that pulled this nation out of poverty, and that in turn reinforced the legitimacy of their rule.

Huge swathes of the southern and eastern coasts have become affluent, and in a single generation millions of people became middle class consumers. But maintaining that high growth has been essential for absorbing the huge numbers of new college graduates each year, and to provide jobs for the floating population of millions of rural migrants moving to the cities from the poorer heartland.

      Now with the prospect of slower growth for the foreseeable future is prompting concern over any hints of instability or unrest -- particularly ahead of a planned leadership change in 2012.  Already, southern Guangdong province, China’s main exporting base, has been hit by a series of labor strikes partly attributed to the decline in orders from Europe.  

Yu, in a briefing for reporters, said growth in the fourth quarter of 2011 is expected to dip below 9 percent, partly as a result of sluggish growth in the United States and the continuing sovereign debt crisis in the euro-zone countries. He said the forecast for next year would be growth lower than 9 percent, followed by growth between 7 and 8 percent through 2017.

“China had been growing at high speed for three decades,” Yu said. But now, he said, “China’s fundamentals are changing, including demography and the demand and supply of labor.”

The forecast largely confirms the accumulating anecdotal evidence that China — the world’s second-largest economy in GDP terms — is entering what could be a painful period of adjustment, as the country begins to shift away from an economy fueled by exports and lavish government spending on infrastructure.

Preliminary numbers for December show that manufacturing in China decreased for the month, following a larger contraction in November. The Commerce Ministry reported Thursday that foreign investment into China dropped 9.76 percent in November year-on-year, mainly because of a 23 percent falloff in investment from the United States. And export growth continued to slow, because of the drop in demand from Europe and the U.S.