A disturbing article in the Financial Times
Slowdown threatens stability, says China PM
By Geoff Dyer in Beijing and David Pilling in Hong Kong
Published: November 3 2008 18:55 Last updated: November 3 2008 18:55
Wen Jiabao, China’s prime minister, warned that high growth was needed to maintain social stability as fresh evidence emerged on Monday that China’s economy was slowing quickly.
In an article in a Communist party magazine, Mr Wen said 2008 was “the most difficult year in recent years” and maintaining high growth was the priority.
“We must be crystal-clear that without a certain pace of economic growth, there will be difficulties with employment, fiscal revenues and social development . . . and factors damaging social stability will grow,” he wrote in the magazine, Seeking Truth.
Slowdown fears in China were exacerbated by two surveys of the manufacturing sector which both showed a sharp decline. The China purchasing managers’ index compiled by the brokerage CLSA fell from 47.7 points to 45.2 points in October – the steepest monthly fall and the lowest point since the index was started in 2004. Meanwhile, a government-backed survey of manufacturers dropped 6.6 points to 44.6 in October, also a record fall.
The Chinese figures came as Manmohan Singh, India’s prime minister, said New Delhi was ready to boost public spending and cut interest rates to sustain economic growth. In Seoul, South Korea unveiled an $11bn stimulus package – the second package in less than three weeks.
The Chinese figures came after an official at the central bank indicated that government quotas on new bank lending had been abandoned.
Stephen Roach, chairman of Morgan Stanley Asia, said the flurry of recent announcements could indicate that Chinese authorities knew growth had already dipped below 8 per cent.
