What Country is the Only One Growing Economically? - December 22, 2008

Can you name the only industrialized nation that has positive economic growth? If you said China, you would be correct. As the fourth largest economic country, and the only one posting above breakeven growth, China has begun to address the country’s slowing economy as the worldwide crisis is beginning to drag the country’s progress down.

Marking the fourth time since mid-September, China reduced their deposit rate by 0.27%, dropping the rate to its current level of 2.25%. Today’s announcement comes on the heels of last month’s rate cut, which had pushed the deposit rate to its lowest levels since 2004.

In addition, the country’s benchmark one-year lending rate was also reduced by 0.27%, to an adjusted rate of 5.31%.

For the year, China’s economy is expected to grow by 9%, and impressive number in these times. However, that figure comes in well below last year’s growth rate of nearly 12%. The country also faces countless job cuts as analysts forecast next year’s growth rate to be in the low 6% range.

Throughout the nation, thousands of factories have closed as global demand for Chinese exports plunged. Furthermore, laid-off workers have clashed with police in protest over unpaid wages by their former employers. Domestic industries, such as real estate and auto sales, also have laid-off workers, leading to more job losses and uneasiness.

In Beijing, officials are trying to evoke consumers and businesses to spend more in order to support a government-initiated stimulus package to help defend the nation against the global recession while revamping domestic economic activity.

As for the country’s production and activity. In November, China’s factory output grew at a 5.4% rate, its slowest pace on record, with exports declining for the first time in more than seven years.

A recent development regarding Chinese workers has come up again before President-elect Obama even takes office. In a petition filed by the AFL-CIO, the U.S.’s largest labor organization, wants to investigate China’s "persistent denial of basic workers rights" which gives the country an unfair trade advantage that warrants U.S. sanctions in response.

The labor group had petitioned the Bush administration in 2004 and 2006 to no avail. Not only did the Bush Admin reject those proposals, but three others that fell on his desk during 2004, 2005 and 2007. It was requested that Bush look into China’s possible manipulation of currency in order to boost imports and exports.

In 2006, the AFL-CIO estimated that Chinese exports had a 43% cost advantage over U.S. exports, in which the labor organization attributes the loss of some 973,000 U.S. manufacturing jobs on top of an addition 260,000 jobs in other industries and sectors.

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