China’s Economy Faces 2009 ‘Hard Landing’
China faces an economic “hard landing” and the risk of social unrest with growth slowing to 6 percent or less this year, the weakest pace since 1990, Fitch Ratings said.
James McCormack, the Hong Kong-based head of Asian sovereign ratings for Fitch, gave the estimate in a teleconference today.
That would be less than half of the 13 percent pace that pushed China past Germany to become the world’s third-biggest economy in 2007, according to revised statistics released this week. As many as 4 million migrant workers lost their jobs last year as factories closed and that figure may jump by another 5 million in 2009, according to Credit Suisse AG.
“The 6 percent number is already what we would call a hard landing in China, meaning rising unemployment and the need for an aggressive policy response,” McCormack said. “Social unrest is a big unknown.”
China’s economy, the biggest contributor to global growth, is running out of steam as exports wane and the property market cools before a 4 trillion yuan ($585 billion) stimulus package kicks in. The slowdown is hurting companies from toy, clothing and electronics makers to airlines and property developers.
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