China’s economic growth, though still sizzling by most standards, moderated somewhat in the first three months of 2008. The National Bureau of Statistics said that first quarter GDP growth stood at 10.6%, compared to 11.7% for the same period last year.
Indeed, slowing growth was the mantra among economy watchers, with several groups revising their GDP projections for China.
The World Bank lowered its 2008 growth estimate to 9.4% from 9.6%, which was already down from a previous projection of 10.8%. Rising prices and the effects of a global slowdown were blamed for the lowered estimate.
However, the bank asserted that Chinese growth would still be robust enough to drive the global economy, thus “providing a possible counterweight to the slowing industrial economies” such as the US.
Meanwhile, the Asian Development Bank (ADB), having previously put China’s 2008 economic growth at 10.8%, revised its estimate downwards to 10%. The bank also outlined a worst-case scenario in which China’s GDP growth would slow to 7%.
Both the World Bank and the ADB highlighted falling exports as one culprit for slowing growth. This was confirmed by China’s first quarter trade figures. The trade surplus declined by 10.8% year-on-year to US$41.42 billion. Exports grew 21% to US$305.9 billion while imports were up 29% at US$264.48 billion.
Exports to the US were flagged as being expecially slow. Fan Gang, an economist with the central bank, warned that a 1% slide in the US economy could translate into a 5%-6% drop in China’s exports to America. Fan added that a year-long US economic slowdown could end up wiping 1% off China’s GDP growth.