(business) China Slowdown May Be Longer Than '09 Financial Crisis

China’s economic slowdown may last longer than during the global financial crisis because of worsening external demand and limited lending to smaller companies, a state researcher said.

Growth may slow for a ninth straight period to below 7 percent in the first quarter, Yuan Gangming, an economist with the Chinese Academy of Social Sciences, said in an interview Sept. 19 in Beijing. Yuan, who formerly headed CASS’s Office of Macroeconomic Research in the Institute of Economics, forecast 7.4 percent expansion in the third quarter and 7.2 percent in the last period of the year.

 Photographer: Nelson Ching/Bloomberg

The slowdown may pressure new leaders of the Communist Party, set to take office this year in a once-a-decade power handover, to step up stimulus efforts. A report yesterday showed China’s manufacturing may contract for an 11th month, and Yuan said the central bank has been too focused on controlling inflation at the expense of growth.

“The slowdown will definitely extend into the first quarter of next year,” said Yuan, 58, who advises the government without being directly involved in policy making. “That will provide a good starting point for the new generation of leadership to make a turnaround, because things can’t get worse.” 

read more: Bloomberg Businessweek

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