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China To See Worst Growth In Decade

JANUARY 19, 2015

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China To See Worst Growth In Decade

 China To See Worst Growth In Decade 

The Chinese economic growth rate is likely to cool further this year, limited by sluggish lending, a housing slump and weak global demand. China is predicted to grow at 7 % this year and slow down to 6.8 % next year, according to the economists' consensus. China's economy expanded by 7.2 % in the final quarter of 2014, the slowest since the depths of the global financial crisis. Beijing faces its worst downturn in a generation, due to government efforts to transform the economy away from a heavy export reliance towards consumption and services. But a falling property market caused by oversupply and overinvestment and an unprecedented borrowing binge that helped China through the worst of the global crisis, was not planned.

A further slowdown in China could endanger the chances of a global revival in growth this year, which is being led by the "single engine" of strong hiring and economic activity in the United States. Indeed, economists in a poll last week had cited weak growth in China and the euro zone as the biggest risks to the global economy this year. Investment flows into China are an important indicator of the health of the global economy, which rose just 1.7 % last year, lower than the 5.3% growth in 2013. Besides, the credit growth has also lagged expectations despite the rate cut by the central bank as cautious banks remain reluctant to lend due to rising corporate debts and bad loans.


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