World

Global Economy Squeezed by Worsening Slowdown in China

Published

9 years ago

January 20, 2015

A woman walks by an advertisement billboard for a new shopping mall which is under construction in Beijing, China Tuesday, Jan. 20, 2015. China’s economic growth slowed to 7.4 percent last year, the weakest expansion in more than two decades. (AP Photo/Andy Wong)

BY KELVIN CHAN, AP Business Writers
PAUL WISEMAN, AP Business Writers

HONG KONG (AP) — The global economy, slowed by stagnation in Europe and Japan, is being further hampered by China’s decelerating growth.

The Chinese economy grew 7.4 percent in 2014, its weakest performance in nearly a quarter-century. And its growth is forecast to slow even more over the next two years.

The figures released Tuesday remain, by just about any measure, impressive. China continues to grow at more than twice the pace of the overall world and about three times as fast as the U.S. economy. Yet its growth rate marks a sharp drop from China’s sizzling double-digit expansion in previous years.

And given its size, China has an outsize effect on the world. China’s share of the global economy climbed from 4.5 percent in 2000 to an estimated 11.3 percent last year, according to the World Bank.

“China is the second-largest economy in the world,” said Paul Sheard, chief global economist at Standard & Poor’s Ratings Services. “So when it slows, the rest of the world is impacted.”

On Tuesday, the International Monetary Fund downgraded its forecast for the global economy for this year and next and pointed to China’s slowing economy as a key factor. The IMF said China’s growth would weaken to 6.8 percent this year and 6.3 percent in 2016. China’s slowdown will dent growth in countries it imports from, especially in Asia, the report said.

China’s 2014 expansion was its slowest since 1990, when growth tumbled to 3.8 percent — a result of economic sanctions imposed on China after its violent crackdown on the Tiananmen Square protests. Last year’s 7.4 percent growth undershot Beijing’s target of 7.5 percent, its first miss since 1998, according to analysts.

Economists expect the slowdown to deepen, clouding the outlook for the world economy as China transitions away from an era of supercharged but unsustainable growth that fueled demand for everything from Australian iron ore to European luxury goods.

Few think the Chinese slowdown will do much direct damage to the strengthening economy of the United States. The United States is enjoying sustained improvement, with healthy job growth, falling oil prices, rising auto sales, low interest rates and an easing of government cutbacks fueling steady expansion.

The pain will be more intense in countries such as Australia and Malaysia that rely heavily on the Chinese market, said Nariman Behravesh, chief economist at IHS.

“Those most hurt will be the commodity-exporting countries in Africa and Latin America and China’s neighbors,” Behravesh said.

Chinese businesses are bracing for a more painful year.

“Competition will be even more difficult,” said Han Yi, a sales manager at Tianjin Yihsin Packing Plastic Co., which employs 700 people making plastic cups and cookie packaging in Tianjin, about an hour southeast of Beijing.

Han complained that sales in 2014 dipped about 5 percent from the year before and the company had to improve product quality and reliability to compete for new clients. Even then, it was able to win only one new account from a rapidly expanding customer.

“The situation would be much worse if we could not win this new client,” he said.

China’s slowdown is partly intentional: Beijing wants to move the country away from super-fast growth based on often-wasteful investment in factories and real estate to sturdier but slower growth based on spending by Chinese consumers.

The slowdown “is by and large a good thing,” S&P’s Sheard said. “China was growing at an unsustainably fast pace.”

But the transition, already difficult because consumers have never been the driving force behind China’s growth, has been buffeted by a range of problems. They include a slumping property market and uneven exports.

Some analysts expect China to gradually provide economic stimulus this year to prevent growth from fading too fast. But they don’t expect a major spending splurge. Debt is already at worrying levels after the government engineered a credit-fueled response to the 2008 global crisis.

“Credit risks will likely continue to prevent policymakers from using monetary policy too aggressively in order to shore up growth,” said Julian Evans-Pritchard of Capital Economics, who forecasts 7 percent growth in China this year.

Consumption should receive a boost from the slump in global oil prices. But it’s unlikely to fully offset the slowdown of investment in areas already suffering from overcapacity such as property and heavy industry, he said.

Chinese officials have tried to lower expectations by saying growth below the official target would be acceptable.

President Xi Jinping said last year that the economy has entered a “new normal.” But a surprise interest rate cut by policymakers in November indicated they were worried about a spike in job losses.

Growth in the fourth quarter of last year was 7.3 percent, unchanged from the previous quarter, which was the slowest quarterly expansion in five years. China’s economy grew 7.7 percent in 2013.

Staff at the Wanjiang Xiufang garment company in Dongguan, southern Guangdong province, said they were battling competition from an increasing number of rival factories even as consumer spending on the women’s and children’s clothing they make weakened.

Average profit on a hoodie, for example, fell to 8 yuan ($1.29) last year, down from 10 yuan ($1.60 previously, said Lin Rongguang.

“We need to produce new products with better quality but a lower price,” Lin said. “I know it will decrease our profit, but we have to survive first,” he said.

___

Wiseman reported from Washington. AP researcher Fu Ting contributed.

Oakland Post

Posts by Oakland Post

Up Next

Britain and Commonwealth May Suspend Guyana for Breaching Rules

Don't Miss

Kenya: Police Tear-Gas School Kids in Demo Over Playground

Oakland Post

Click to comment

Barbara Lee

Congresswoman Barbara Lee Issues Statement on Deaths of Humanitarian Aid Volunteers in Gaza 

On April 2, a day after an Israeli airstrike erroneously killed seven employees of World Central Kitchen (WCK), a humanitarian organization delivering aid in the Gaza Strip, a statement was release by Rep. Barbara Lee (D-CA-12). “This is a devastating and avoidable tragedy. My prayers go to the families and loved ones of the selfless members of the World Central Kitchen team whose lives were lost,” said Lee.

Published

1 week ago

April 17, 2024

Oakland Post

Congresswoman Barbara Lee

By California Black Media

“This is a devastating and avoidable tragedy. My prayers go to the families and loved ones of the selfless members of the World Central Kitchen team whose lives were lost,” said Lee.

The same day, it was confirmed by the organization that the humanitarian aid volunteers were killed in a strike carried out by Israel Defense Forces (IDF). Prior to the incident, members of the team had been travelling in two armored vehicles marked with the WCF logo and they had been coordinating their movements with the IDF. The group had successfully delivered 10 tons of humanitarian food in a deconflicted zone when its convoy was struck.

“This is not only an attack against WCK. This is an attack on humanitarian organizations showing up in the direst situations where food is being used as a weapon of war. This is unforgivable,” said Erin Gore, chief executive officer of World Central Kitchen.

The seven victims included a U.S. citizen as well as others from Australia, Poland, the United Kingdom, Canada, and Palestine.

Lee has been a vocal advocate for a ceasefire in Gaza and has supported actions by President Joe Biden to airdrop humanitarian aid in the area.

“Far too many civilians have lost their lives as a result of Benjamin Netanyahu’s reprehensible military offensive. The U.S. must join with our allies and demand an immediate, permanent ceasefire – it’s long overdue,” Lee said.

Oakland Post

Posts by Oakland Post

Bay Area

Nigerian Bank Chief Killed in Helicopter Crash on Way to Superbowl XVIII

According to the San Bernardino County Sheriff’s Dept., the crash occurred near Nipton, on the edge of the Mojave Desert Preserve. The poor weather conditions — rain, wind and snow showers—may have contributed to the accident, although the investigation is not complete. All six aboard were killed. Herbert Wigwe, 57, founded Access Bank in 1989, and it became the country’s largest competitor, Diamond Bank in 2018.

Published

2 months ago

February 24, 2024

Oakland Post

Herbert Wigwe with his wife, Chizoba Wigwe, left, and Abimbola Ogunbanjo, right. ENigeria Newspaper image.

By Post Staff

The co-founder of one of Nigeria’s largest banks died with his wife, son and three others when the helicopter transporting them from Palm Springs, Ca., to Boulder City, Nev. to attend the fifty-eighth SuperBowl at the stadium outside Las Vegas crashed on Feb. 9.

Herbert Wigwe, 57, founded Access Bank in 1989, and it became the country’s largest competitor, Diamond Bank in 2018.

More recently, Wigwe was planning to open a banking service in Asia this year after making successful expansions to other parts of Africa, including South Africa, Kenya, and Botswana.

Nigerian President Bola Tinubu described Wigwe’s death as an ‘overwhelming tragedy.”

Oakland resident and Nigerian immigrant Kayode Gbadebo agrees with Tinubu. He met Wigwe in Nigeria but crossed paths with him in London in 2006. Wigwe, he said, “took risks.”

He was young and people thought he couldn’t do what he intended, which was not so much about money but community.

“He was more like Jesus in washing the feet of the poor– Wigwe was culturizing community,” Gbadebo said.

“There will never be another like him. This is a deep, deep loss” and he hopes everyone will eventually “be comforted.”

He was also disappointed that a replacement has already been named even before Wigwe is buried. “It is not reasonable. You don’t want a vacuum, but it’s” not fair to the family, Gbadebo observed.

Wigwe had also been working to solve the migration issues from African countries, believing that “investing in higher education was key to controlling mass migration, which “is destabilising countries across the world,” BBC News reported.

“We need to take a holistic approach to address global migration, starting with our traditional framework for international development,” Wigwe wrote.

To that end, according to BBC News, Wigwe was preparing to open Wigwe University in Niger, where he was from.

“The best place to limit migration is not in the middle of the Mediterranean or the English Channel or the Rio Grande. It is in the home countries that so many migrants are so desperate to leave,” he wrote, saying his university was an opportunity for him “to give back to society.”

Besides Wigwe and his wife, Chizoba Nwuba Wigwe, and one son, two crew members and Bimbo Ogunbanjo, former group chairman of the Nigerian Exchange Group Plc, were also killed in the crash.

According to Wikipedia, three other children survive Wigwe.

In his statement reported in People magazine, Tinubu described Wigwe as “a distinguished banker, humanitarian, and entrepreneur.”

“I pray for the peaceful repose of the departed and ask God Almighty to comfort the multitude of Nigerians who are grieving and the families of the deceased at this deeply agonizing moment,” the president said.

He added, “Their passing is an overwhelming tragedy that is shocking beyond comprehension.”

Besides feeling the tremendous loss, Gbadebo fears the disorder and greed that will follow. “It’s a mess,” he said.

People magazine, BBC News and Wikipedia were the sources for this report.

Oakland Post

Posts by Oakland Post

Activism

No Valid Reason for Failing to Condemn Hamas’ Act of Terrorism

On Oct. 7, 2023, Hamas terrorists crossed the Israel-Gaza border and indiscriminately slaughtered Israeli civilians in their homes. They killed nearly 300 young people at a music festival and took at least 200 hostages including 30 children. The atrocities they committed included massacres of families, abduction of the elderly and children, burning of babies and rapes of women.

Published

6 months ago

November 3, 2023

Oakland Post

iStock image.

By Joe W. Bowers Jr.

California Black Media

OPINION

On Oct. 7, 2023, Hamas terrorists crossed the Israel-Gaza border and indiscriminately slaughtered Israeli civilians in their homes.

They killed nearly 300 young people at a music festival and took at least 200 hostages including 30 children. The atrocities they committed included massacres of families, abduction of the elderly and children, burning of babies and rapes of women.

The horrific surprise attack deserves universal and unequivocal condemnation. President Joe Biden called what Hamas did “an act of sheer evil” and pledged to defend the lives of Israelis and Jewish Americans.

He said, “Let there be no doubt. The United States has Israel’s back. We’ll make sure the Jewish and democratic state of Israel can defend itself today, tomorrow, as we always have.”

Hamas killed approximately 1,400 people including 32 Americans. Citizens from 40 different countries including the United Kingdom, France, Mexico, and Thailand were killed or reported missing.

Hamas fighters breached Israel’s border defenses on the final day of Sukkot while soldiers were away due to the holiday and launched attacks on 22 towns outside the Gaza Strip. This security lapse has been described as a catastrophic failure of Israel’s intelligence agencies..

Hamas is an extremist Islamist militant organization that has governed the Gaza Strip since 2007. It is recognized as an Iranian-backed terrorist group by the U.S. and the European Union and has a long history of violence against Jews and Palestinians, the latter of whom they often use as human shields.

While there have been plenty of groups who have unequivocally condemned the massacres, there are a number who haven’t, including organizations such as the Democratic Socialists of America (DSA), Black Alliance for Peace, Red Nation, and independent Black Lives Matter (BLM) chapters (excluding the national Black Lives Matter Global Network Foundation).

The DSA San Francisco chapter put out a statement on Oct. 9 that said, “Socialists support the Palestinian people’s, and all people’s, right to resist and fight for their own liberation. This weekend’s events are no different.”

Student organizations at a number of universities and colleges in California signed a solidarity statement titled “Resistance Uprising in Gaza” from Students for Justice in Palestine (SJP). The statement attributes the violence of the Hamas attack to what it refers to as Israeli apartheid and occupation.

The SJP statement written by Bears for Palestine at UC Berkeley says, “We support the resistance, we support the liberation movement, and we indisputably support the Uprising.” Essentially, these students are indirectly associating themselves with Hamas’ barbaric acts under the guise of “resistance.”

Signing the statement were 51 student organizations including those from Stanford, UC Berkeley, UCLA, UC Davis, UC San Diego, CSU Sacramento, and USC.

A statement signed by 34 Harvard student organizations said, “We, the undersigned student organizations, hold the Israeli regime entirely responsible for all unfolding violence.”

Many university leaders, where these students are enrolled, have been guilty of failing to unequivocally condemn Hamas and for inadequately addressing their students’ expressed support for Hamas.

Several Stanford faculty members, including three Nobel laureates, condemned Stanford’s administrators’ weak response to acts of terrorism and the expression of pro-Hamas sentiments by students on campus.

Israel unilaterally withdrew from Gaza in 2005. It dismantled 21 Israeli settlements in the territory and handed them over to the Palestinian Authority.

The assault by Hamas on Oct. 7 was not an ordinary clash with Israel. Hamas’ actions resulted in the deadliest single day for Jews since the Holocaust.

While there are valid reasons for protesting Israel’s treatment of Palestinians and a real reckoning with the Israeli government on its policies is long overdue, nothing justifies Hamas’ attack.

Israelis who were killed largely had nothing to do with the conditions of Palestinians in Gaza. Some of the victims weren’t even Israeli — they were just tourists.

The students blaming Israel for the atrocities committed by Hamas have faced criticism. Some groups have withdrawn their endorsements because of the backlash aimed at them. Others have doubled down on their activism. SJP held a “National Day of Resistance” on several campuses.

Several CEOs have asked Harvard to disclose a list of members from the organizations assigning responsibility to Israel to insure they do not hire any of their members. A Berkeley law professor has also urged firms not to hire his students who have publicly blamed Israel for the war.

This California Black Media report was supported in whole or in part by funding provided by the State of California, administered by the California State Library.