Figures get ugly

In the fourth quarter of 2008, economic growth slid to 6.8 percent year-on-year, sharply down from 9 percent in the previous quarter, the National Bureau of Statistics (NBS) has reported.

That was the slowest pace since the fourth quarter of 1999, when the economy grew only 6.1 percent as a result of the Asian financial crisis.

On a full-year basis, GDP grew 9 percent year-on-year, the lowest since 2001, when an annual rate of 8.3 percent was recorded.

Breaking down growth by activity, Ma said, the 9 percent included 4.2 percentage points from investment, 4 points from consumption and 0.8 points from exports. In 2007, exports contributed more than 3 percentage points of the annual 13 percent GDP growth.

Tang Min, deputy secretary of the China Development Research Foundation, a think tank linked to the State Council (cabinet), said the financial crisis had struck hard at exports and export-related industries, which led to some ugly figures.

"As a major economy, China relies too much on exports, which entails big risks," said Tang.

Ding Yuanzhu, a Beijing-based economic scholar with the National School of Administration, a training facility for civil servants, echoed Tang's assessment. Even though China has become the world's third-largest economy, it has weaknesses, such as a heavy reliance on trade and weak domestic demand. The global economic crisis underscored those weaknesses, he said.

In mid-January, the NBS revised China's 2007 GDP to 25.73 trillion yuan (3.76 trillion U.S. dollars), which enabled China to overtake Germany as the world's third-largest economy, after the United States and Japan.

Incomes, retail sales are silver lining

Ding and Tang described the Chinese economic picture as grim, but they also saw signs of optimism, because other major economic indicators such as retail sales, urban incomes and investment continued to grow strongly.

"It is good to have robust consumption, with retail sales growing markedly. Moreover, net income of urban residents didn't fall," said Tang.

According to the NBS, retail sales jumped 21.6 percent last year to 10.8 trillion yuan, which was 4.8 percentage points higher than a year earlier. Urban disposable incomes averaged 15,781 yuan in 2008, up 14.5 percent year-on-year.

The NBS' Ma said real retail sales growth was 17.4 percent in December, or 0.8 percentage points more than in November.

He cited the December sales data as an indication of positive economic change. Other factors included an acceleration in industrial output and a strong rebound in the money supply.

"Domestic sales growth remained relatively fast and consumption in urban and rural areas remained robust," he said, adding that strong consumption growth was expected to continue this year and help offset the impact of any export slowdown.

Another area of growth would be fixed-asset investment, which rose 25.5 percent to 17.23 trillion yuan in 2008. The growth rate was 0.7 percentage points higher than the previous year.

Yuan Gangming, a senior economist at the Underdeveloped Economic Center of the Chinese Academy of Social Sciences (CASS), a major government think tank, saw the 6.8-percent rate as a strong sign that the economy had touched bottom.

"Since many factories reduced production during the Lunar New Year holidays, economic growth in the first and second quarter this year is likely to bounce around the bottom, but we probably won't see uglier figures hereafter," he told Xinhua.

"Now that the monetary and fiscal policies have been turned to positive and a series of measures have been announced, an economic rebound is very likely," he said.