China slowing down as Japanese exports tumble
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The Associated Press
Oluşturulma Tarihi: Ocak 23, 2009 00:00
BEIJING - The notion that Asia’s strong nations could be spared from the global crisis is buried to the ground, as data from China and Japan point to gloomy days ahead. China’s economic growth slows down to 6.8 percent in the last quarter of 2008, while Japan’s exports fall 35 percent in December
China's economic slump worsened in the final quarter of 2008 as the impact of the global crisis spread, heightening fears of job losses and unrest, while Japanese exports fell at a record pace in December.
Yesterday’s reports highlighted the pain spreading throughout export-dependent Asia. Adding to the gloom, South Korea said its economy shrank in the fourth quarter. Singapore warned a day earlier that its economy could contract by up to 5 percent this year.
"It's looking pretty grim for the near term," said David Cohen chief regional economist for Action Economics in Singapore. "The hope is that with all the stimulus measures being announced, the region will turn around in the second half. But that's hardly guaranteed."
In China, growth for the three months through December fell to 6.8 percent compared with a year earlier, down from 9 percent the previous quarter, the government said.
"The global financial crisis is deepening and spreading, with continuing negative impact on the domestic economy," said Ma Jiantang, commissioner of the National Statistics Bureau, at a news conference. A government report promised steps to ensure "a harmonious and stable society."
Premier Wen Jiabao, China's top economic official, is due to visit Europe this month to discuss measures to combat the global slowdown.
Plunge in exports
In Japan, the region's biggest economy, exports fell a record 35 percent in December from a year ago, the government said. The drop-off points toward more cuts in jobs, output and profit forecasts in the coming months.
Already, major exporters such as Toyota Motor and Sony have slashed thousands of workers and scaled back factory lines.
In neighboring South Korea, authorities said the economy shrank 3.4 percent in the fourth quarter as exports plunged.
"[Yesterday’s] data will put to rest forever the notion that Asia could somehow thrive even when the rest of the world slumps," said Kirby Daley, senior strategist at Newedge Group in Hong Kong. "The idea that intra-regional trade will sustain growth within Asia even without U.S. demand has been debunked."
Beijing announced a 4 trillion yuan ($586 billion) plan in November to shield China from the global slowdown by boosting domestic consumption, but its effects will not be felt for several months. Other governments have also announced big stimulus plans, and central banks have slashed interest rates.
In China, exporters have been hit hardest but the slump is spreading to domestic industries as demand for autos, real estate and other goods weakens. Exports fell in November and December for the first time in seven years.
The manager of the Beijing Xingrui Furniture, which sells to the domestic market, said sales are down 50 percent from the same time last year.
Worries over instability
Thousands of factories have closed in China's export-driven southeast and estimates of job losses exceed 2 million. Spooked by scattered labor protests, government leaders worry about rising tensions and possible unrest as laid-off workers stream back to their hometowns. They have promised to create new jobs and are pressing employers to avoid more layoffs.
"Especially since October, the impact of the global crisis spread from small and medium-size enterprises to larger enterprises, from eastern coastal regions to China's heartland," Ma said.
The weak fourth quarter dragged down China's 2008 annual growth to a seven-year low of 9 percent, breaking a five-year streak of double-digit expansion. It was a steep drop from 2007's 13 percent, which saw China pass Germany to become the world's third-largest economy after the U.S. and Japan.
Analysts say conditions will get worse before they improve and have cut forecasts of 2009 growth to as low as 5 percent.
A turnaround will depend on government spending because investment by private companies is likely to weaken further, said Jing Ulrich, JP Morgan's chairwoman for China equities. "While China's policymakers have sought to reorient economic growth from trade to consumption, the adjustment of consumer spending patterns will not happen overnight," Ulrich said in a report.
China's stimulus depends on persuading consumers to spend more. Analysts say that will be tough to achieve while families still feel compelled to save up to 50 percent of their incomes to pay for health care, education and other necessities.
Yesterday’s reports highlighted the pain spreading throughout export-dependent Asia. Adding to the gloom, South Korea said its economy shrank in the fourth quarter. Singapore warned a day earlier that its economy could contract by up to 5 percent this year.
"It's looking pretty grim for the near term," said David Cohen chief regional economist for Action Economics in Singapore. "The hope is that with all the stimulus measures being announced, the region will turn around in the second half. But that's hardly guaranteed."
In China, growth for the three months through December fell to 6.8 percent compared with a year earlier, down from 9 percent the previous quarter, the government said.
"The global financial crisis is deepening and spreading, with continuing negative impact on the domestic economy," said Ma Jiantang, commissioner of the National Statistics Bureau, at a news conference. A government report promised steps to ensure "a harmonious and stable society."
Premier Wen Jiabao, China's top economic official, is due to visit Europe this month to discuss measures to combat the global slowdown.
Plunge in exports
In Japan, the region's biggest economy, exports fell a record 35 percent in December from a year ago, the government said. The drop-off points toward more cuts in jobs, output and profit forecasts in the coming months.
Already, major exporters such as Toyota Motor and Sony have slashed thousands of workers and scaled back factory lines.
In neighboring South Korea, authorities said the economy shrank 3.4 percent in the fourth quarter as exports plunged.
"[Yesterday’s] data will put to rest forever the notion that Asia could somehow thrive even when the rest of the world slumps," said Kirby Daley, senior strategist at Newedge Group in Hong Kong. "The idea that intra-regional trade will sustain growth within Asia even without U.S. demand has been debunked."
Beijing announced a 4 trillion yuan ($586 billion) plan in November to shield China from the global slowdown by boosting domestic consumption, but its effects will not be felt for several months. Other governments have also announced big stimulus plans, and central banks have slashed interest rates.
In China, exporters have been hit hardest but the slump is spreading to domestic industries as demand for autos, real estate and other goods weakens. Exports fell in November and December for the first time in seven years.
The manager of the Beijing Xingrui Furniture, which sells to the domestic market, said sales are down 50 percent from the same time last year.
Worries over instability
Thousands of factories have closed in China's export-driven southeast and estimates of job losses exceed 2 million. Spooked by scattered labor protests, government leaders worry about rising tensions and possible unrest as laid-off workers stream back to their hometowns. They have promised to create new jobs and are pressing employers to avoid more layoffs.
"Especially since October, the impact of the global crisis spread from small and medium-size enterprises to larger enterprises, from eastern coastal regions to China's heartland," Ma said.
The weak fourth quarter dragged down China's 2008 annual growth to a seven-year low of 9 percent, breaking a five-year streak of double-digit expansion. It was a steep drop from 2007's 13 percent, which saw China pass Germany to become the world's third-largest economy after the U.S. and Japan.
Analysts say conditions will get worse before they improve and have cut forecasts of 2009 growth to as low as 5 percent.
A turnaround will depend on government spending because investment by private companies is likely to weaken further, said Jing Ulrich, JP Morgan's chairwoman for China equities. "While China's policymakers have sought to reorient economic growth from trade to consumption, the adjustment of consumer spending patterns will not happen overnight," Ulrich said in a report.
China's stimulus depends on persuading consumers to spend more. Analysts say that will be tough to achieve while families still feel compelled to save up to 50 percent of their incomes to pay for health care, education and other necessities.