China by the New York Times

It’s tough to be optimistic,” said Stephen Green, an economist at Standard Chartered Bank in Shanghai. “The three engines of growth — exports, investment and consumption — have all slowed down.”

The signs are so troubling that last week Prime Minister Wen Jiabao warned that this year would be “the worst in recent years for our economic development.”

A series of government reports released over the last few weeks indicated that China’s export juggernaut was moderating. Real estate construction projects are being suspended. Consumer confidence is in decline. And many factories in southern China are closing, putting tens of thousands of migrant laborers out of work.

Some Chinese companies have even reported that Christmas orders — which were supposed to be placed in late summer or early fall — were down 20 percent this year, as big retailers and toy marketers grew gloomy about the holiday season.

While few economists expect China to fall into recession, analysts are forecasting the worst growth in more than a decade, with the economy expected to expand by as little as 5.8 percent in the fourth quarter this year, down from about 11 percent in 2007.

Analysts worry that a sharp downturn could undermine the country’s already weakening investment climate and impair some of China’s biggest banks, which have bankrolled much of the boom.

Beijing worries that if growth slows to 8 percent or less, not enough jobs will be created in a country that is rapidly urbanizing — and that could lead to social unrest.

To prevent that, the government is preparing a large economic stimulus package, pushing new infrastructure projects, offering aid to exporters and searching for ways to prop up the nation’s severely depressed stock and real estate markets.
“Don’t count on China to get back to double-digit growth for the next few years,” said Dong Tao, an economist at Credit Suisse in Hong Kong.