The Economy of China

HONG KONG (AP) — The global economy, slowed by stagnation in Europe and Japan, is being further hampered by China’s decelerating growth. The Chinese economy grew 7. 4 percent in 2014, its weakest performance in nearly a quarter- century. And its growth is forecast to slow even more over the next two years. The figures released Tuesday remain, by just about any measure, impressive. China continues to grow at more than twice the pace of the overall world and about three times as fast as the U. S. economy. Yet its growth rate marks a sharp drop from China’s sizzling double-digit expansion in

previous years. And given its size, China has an outsize effect on the world. China’s share of the global economy climbed from 4. 5 percent in 2000 to an estimated 11. 3 percent last year, according to the World Bank. “China is the second-largest economy in the world,” said Paul Sheard, chief global economist at Standard & Poor’s Ratings Services. “So when it slows, the rest of the world is impacted. ” On Tuesday, the International Monetary Fund downgraded its forecast for the global economy for this year and next and pointed to China’s slowing economy as a key factor. The IMF said China’s

growth would weaken to 6. 8 percent this year and 6. 3 percent in 2016. China’s slowdown will dent growth in countries it imports from, especially in Asia, the report said. China’s 2014 expansion was its slowest since 1990, when growth tumbled to 3. 8 percent — a result of economic sanctions imposed on China after its violent crackdown on the Tiananmen Square protests. Last year’s 7. 4 percent growth undershot Beijing’s target of 7. 5 percent, its first miss since 1998, according to analysts. Economists expect the slowdown to deepen, clouding the outlook for the world economy as China

transitions away from an era of supercharged but unsustainable growth that fueled demand for everything from Australian iron ore to European luxury goods. Few think the Chinese slowdown will do much direct damage to the strengthening economy of the United States. The United States is enjoying sustained improvement, with healthy job growth, falling oil prices, rising auto sales, low interest rates and an easing of government cutbacks fueling steady expansion. The pain will be more intense in countries such as Australia and Malaysia that rely heavily on the

Chinese market, said Nariman Behravesh, chief economist at IHS. “Those most hurt will be the commodity-exporting countries in Africa and Latin America and China’s neighbors,” Behravesh said. Chinese businesses are bracing for a more painful year. “Competition will be even more difficult,” said Han Yi, a sales manager at Tianjin Yihsin Packing Plastic Co. , which employs 700 people making plastic cups and cookie packaging in Tianjin, about an hour southeast of Beijing. Han complained that sales in 2014 dipped about 5 percent from the year before and the company

had to improve product quality and reliability to compete for new clients. Even then, it was able to win only one new account from a rapidly expanding customer. “The situation would be much worse if we could not win this new client,” he said. China’s slowdown is partly intentional: Beijing wants to move the country away from super-fast growth based on often-wasteful investment in factories and real estate to sturdier but slower growth based on spending by Chinese consumers. The slowdown “is by and large a good thing,” S&P’s Sheard said. “China was growing at an Prev Page Next Page View as single page Search