China's economy showing cracks

China's strong economy appeared to put the nation on the global high ground when the financial tsunami first struck last month, but as the storm continues to rage, that position is looking less sure.

After five years of annual double digit economic growth, and with more than 1.9 trillion dollars in foreign reserves as well as a closed financial system that protected it from toxic US assets, China seemed insulated from the crisis. But with thousands of workers already being laid off as exports shrink, the property market slowing and the stock market low on confidence, the world's fourth biggest economy is clearly starting to hurt amid the global downturn. "People are starting to see the pain, that is in business and also in the labour market. It's not as easy to get a job as it was a few months ago," Beijing-based World Bank economist Louis Kuijs told AFP.

"The bigger the economic crisis - the recession in the US and in Europe - the more it will be felt in China," he said.

China's leaders, for their part, have said the country's best strategy is to keep the economy growing. "If a large country of 1.3 billion people can keep up stable and relatively fast economic growth, that's a big contribution to the world," Premier Wen Jiabao said.

China's GDP growth is expected to shrink to 9.1 percent in the third quarter from 10.1 percent in the second, according to a forecast by Goldman Sachs.

If accurate, it would mark the first time China's quarterly GDP growth has fallen below 10 percent since the end of 2005.

But a fall in the third quarter figure would mostly reflect government policies to moderate growth, Goldman Sachs said, not the US crisis. - SHANGHAI,

AFP