Inside China Today

China’s GPD drops to 9%, the slowest growth in 5 years.

China is the latest victim of the global financial crisis, posting its slowest growth in five years. Monday’s figures released by the Chinese Bureau of Statistics showed the Gross Domestic Product for the third quarter stands at nine percent, well below estimates by Bloomberg economists.

Sydney based economist Sherman Chen of Moody’s Economy says the decrease was due to a sudden decline in September of the industrial sector, as state release figures for retail sales and fixed asset investments still increased from last year.

Ms Chen says that figures released in July about the Chinese market did not predict such a dire turn, but September figures were markedly worse, reflecting the global financial crisis in the past month. She believes that the Chinese economy is unlikely to look better in the fourth quarter.

Some experts believe that the continuing appreciation of the Chinese Yuan for three years straight has had a very negative effect on the economy. Ms Chen disagrees and says she doesn’t believe the exchange rate caused the GDP to decrease. She says the slowdown of the US and European economy has reduced the spending of consumers and businesses there, impacting Chinese exports. She says the Chinese government may not have other ways to push forward the economy, and it’s likely the Yuan will continue to fall in the coming months.