China GDP growth at lowest level since 2009
A worker buys meal from a mobile vendor outside the construction site of a new real estate project in Beijing, April 12, 2012. A new World Bank report projects GDP growth in China will be 8.2 percent in 2012 and 8.6 percent in 2013.
Jeremy Hobson: The last three months in China were the worst for the country’s economic growth since 2009. 8.1 percent GDP, compared with 8.9 percent last quarter. Now if 8.1 sounds like a good number, it would be here in the U.S., where growth was just 3 percent at last check. But, this is China we’re talking about, a country with an economy that is still developing.
The BBC’s Juliana Liu is with us now from Hong Kong to go behind the numbers. Good morning.
Juliana Liu: Good morning.
Hobson: So what’s being seen as the cause of this slowdown?
Liu: Well, exports out of China are slowing because demand in places like Europe and the U.S. are weaker than has been before but really what’s driving the slowdown in China is the property market. In the last ten years, property prices have gone up by more than ten-fold. And you can imagine that makes a lot of people very angry because they’re being priced out of the property market. So in response to that, the Chinese government has been trying to slow housing inflation and that, in effect, is what’s causing the slowdown in the overall economy that we’re seeing now.
Hobson: And I have to say, when I hear something like that over here in the United States, it sounds like you’re experiencing something very similar to what we did right before our big financial crash with housing prices just going up up up.
Liu: Absolutely -- that’s certainly the big fear. And that property bubble bursting in the United States has offered a lot of lessons to policy makers in China. So they’re absolutely trying to avoid something like that which is why this slowdown is very much a government guided effort. But the real worry is that, in some areas, perhaps this effort has already gone too far. We heard this week that a property developer has declared bankruptcy for the first time because of lack of access to credit so the worry is, if a lot of property developers go bankrupt, would that have the same effect as a hard landing?
Hobson: The BBC’s Juliana Liu in Hong Kong. Thanks a lot.
Liu: Thank you.