The WSJ declares that “China has next to no chance of experiencing a traditional recession,” which is a couple of quarters of a decline in GDP. Well, that settles that then.

Domestic economists for years considered 8% to 9% the economy’s “normal” growth rate, but have started to raise those estimates to about 10%. The Chinese Academy of Social Sciences last year put the nation’s potential annual growth rate in a range of 9.5% to 10.7%. That is also in line with the average 9.8% annual rate since economic changes began in 1978.

With that kind of momentum, China has next to no chance of experiencing a traditional recession, defined as a decline in economic activity. But there are still fears that a global slowdown could pull China’s rate of growth well below its potential, or below the level needed to create sufficient jobs — what some economists call a growth recession. “For China, below 8% growth should be considered a recession,” said Li Zhikun, an economist at China Jianyin Investment Securities in Beijing.

The Asian Development Bank warned recently that in a worst-case scenario — a harsh global slowdown combined with high domestic inflation and a collapse in financial markets — China’s growth could drop to as low as 7% this year. But even a much less drastic slowdown could imperil the government’s targets for creating new jobs for its swelling urban population. Chinese officials project they need to add 10 million jobs a year to keep pace with the expansion of the work force.

Maybe this is all true, and that things really are different this time, and China can grow handily when its exports slow substantially. Maybe the quality of China’s GDP numbers and its bank loans are better than some skeptics think. Maybe and maybe not.

This entry was posted on Thursday, April 17th, 2008 at 9:51 am and is filed under China, business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.