China's economy slowed dramatically at the end of 2008 as the full force of the global crisis hit home, dragging growth to a seven-year low, new official data show today.
The world's third-largest economy expanded by just 6.8% in the final quarter, pulling the full-year growth figure down to 9%, the National Bureau of Statistics said.
Coming after 13% growth in 2007, the figures offered the most complete picture yet of just how severely the world crisis has hit China's export-dependent economy.
China's exports declined by 2.2% in November, the first such drop in seven years, and the trend was extended into a second month with a 2.8% drop in December.
In another sign of the precipitous decline of activity, the consumer price index, the main gauge of inflation, slowed to 1.2% in the December, the statistics bureau said.
China had started out 2008 concerned that rising prices would be a major challenge - inflation was at nearly a 12-year high of 8.7% in February - but ended the year fearing deflation instead.
Economists said that China would definitely suffer deflation in the coming months and it would be extremely difficult for the economy to grow this year by 8%, a figure the government has long targetted as its benchmark rate.
Earlier this week, Premier Wen Jiabao warned that 2009 would be 'the most difficult year for China's economic development so far this century.'
From the Chinese government's perspective, the most worrying aspect of the slowdown is the impact on employment and the subsequent potential for social unrest if many people are out of work.
In the last three months alone, 560,000 Chinese joined the army of the unemployed, according to official data this week that almost certainly understated the actual extent of the problem.
