World’s economy needs China to slow growth gradually

Associated Press

SHANGHAI

China’s high-flying economy is starting to lose altitude. The big question is whether the world’s economic superstar will shrink gradually — or so fast that it harms a fragile global economy.

China’s comedown is being engineered by its policymakers. They want to slow expansion just enough to cool inflation without sapping job growth.

It’s a delicate task.

“Nobody can say with any confidence” if they’ll succeed, says Barry Eichengreen, an economics professor at the University of California, Berkeley.

China’s explosive growth remains the envy of developed nations such as the U.S. It grew faster than any other major economy in the April-June quarter, according to The Associated Press’ latest quarterly Global Economy Tracker. Only Argentina’s much smaller economy matched China’s 9.5 percent annual growth rate.

By contrast, the U.S. economy grew at a 1.3 percent rate in the April-June quarter, before expanding 2.5 percent in the July- September period.

The AP’s Global Economy Tracker monitors economic and financial data in 30 countries representing more than 80 percent of global output.

Economists worry that China’s economy could suffer what they call a “hard landing.” They fear that a sudden plunge in China’s growth would harm the economies of the United States, Europe and small countries that need China to buy their coal, copper and other raw materials.

On Tuesday, a Chinese government group said manufacturing grew in October at the slowest pace in nearly three years, partly due to weak export orders. It forecast that the economy would slow further the rest of the year.

The threat from a slower-growing Chinese economy comes as the United States is still struggling to recover from the Great Recession of 2007-2009. And an agreement last week to ease Europe’s debt crisis might not prevent the continent from sliding back into a recession that would ripple through the United States and other countries.