Slowdown sparks scramble to shore up China growth

SHANGHAI – China’s leaders are reversing their two-year effort to cool the economy, seeking to counter slowdowns in manufacturing and property that are dragging growth lower and threatening to spur unrest.

In the latest sign the world’s No 2 economy is weakening faster than thought, business surveys released yesterday showed manufacturing contracted in November for the first time in nearly three years. That news came a day after Beijing moved to invigorate business activity by easing credit curbs, ending a long campaign to take some fizz out of rapidly expanding economy. China’s leaders had resisted easing lending curbs out of fear that opening the spigots might revive an outright investment boom and re-ignite inflation.High living costs are risky for China’s communist leaders because they erode the economic gains that underpin the ruling party’s claim to power. But slowing growth is another peril: already news of labour unrest at factories in the south suggests that workers are being squeezed as exporters juggle tight credit and slowing demand.The decision by the People’s Bank of China to reduce the amount of money that China’s commercial lenders must hold in reserve by 0,5 per cent of their deposits ‘is a clear signal that Beijing now sees the balance of risks as lying with growth rather than inflation’, said Stephen Green, an economist with Standard Chartered in Shanghai.The European debt crisis and feeble US recovery have weakened demand in China’s biggest export market, while at home efforts to curb inflation by cooling the property market are hurting a wide range of industries heavily dependent on housing and other construction.Worries over erring on the side of too fast growth are being overshadowed by greater alarm over a deeper slump as conditions worsen overseas.’They’re stuck,’ Patrick Chovanec, an associate professor at Tsinghua University’s School of Economics and Management in Beijing said of China’s policymakers.The Chinese economy is one of the few still growing at a respectable pace, and Beijing’s leaders intend to keep it that way.China’s economic growth eased to a still-robust 9,1 per cent in the quarter ending in September from 9,5 the previous quarter. – Nampa-AP