POTC Predicts Chinese Economy Will Stumble Badly in '09

BEIJING (Dow Jones)--China's economy grew 6.8% in the fourth quarter, the lowest quarterly growth rate in seven years, as demand weakened and domestic manufacturing and investment activity slowed amid the worsening global financial crisis. --Government data issued Thursday also showed inflation continued to fall in December, adding to concerns about the possibility of deflation, and likely prompting Beijing to step up its efforts to boost economic growth back to 8%, generally considered the minimum rate needed to create sufficient jobs and allay social unrest. --Sherman Chan, an economist at Moody's Economy.com, said earlier this week China's central bank could cut interest rates again by Saturday to boost business and household sentiment before the week-long Chinese New Year celebration that starts Sunday. --Growth in China's gross domestic product during the October-December period was sharply down from the 9.0% expansion in the third quarter, the National Bureau of Statistics data showed. --But it was mostly in line with the median 6.9% forecast of 13 economists surveyed earlier by Dow Jones Newswires. It was the lowest growth rate since the 6.6% in the fourth quarter of 2001, according to economists' estimates. --The slowing growth rate comes despite Beijing's launch in November of a CNY4 trillion infrastructure-led investment plan through 2010 and five lending rate cuts totaling 216 basis points since the middle of September. --China's economy, which overtook Germany's as the world's third biggest in 2007, grew 9.0% in 2008, slowing from the previous year's 13% expansion and snapping six consecutive years of accelerating growth. China's GDP totaled CNY30.067 trillion last year, government data showed. --"The international financial crisis is deepening and spreading with continuing negative impact on the domestic economy," the statistics bureau said in a statement on economic data for the fourth quarter and 2008. --It said that China would continue to "effectively implement the policies and measures of promoting growth and stimulating domestic demand." --For the full year, value-added industrial production rose 12.9%. December figures weren't immediately available. --Fixed-asset investment growth in urban areas for all of 2008 grew 26.1%, slowing from January-November's rate of 26.8%. --National FAI, which includes urban and rural areas and is issued only at the end of each quarter, rose 25.5% in 2008, marking a slowdown from January-September's 27.0% rise, but up from 2007's 24.8% increase. --Consumer inflation eased for the eighth straight month in December to an over two-year low, while the producer price index declined for the first time since late 2002. --China's consumer price index last month rose 1.2% from a year earlier, while the PPI fell 1.1%. For 2008, CPI rose 5.9%, compared with 2007's 4.8% rise, and PPI rose 6.9%, about double the 3.1% gain in the previous year. -By China bureau, Dow Jones Newswires; 8610 6588-5848; jr.wu@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=lonEDYmMi3szTsKMONzhJw%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires January 21, 2009 21:21 ET (02:21 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 09 21 PM EST 01-21-09