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China's growth numbers lowest since financial crisis

Economists at CNN Money recently conducted a survey to study the growth of Chinese economy and found out that the world's second-largest economy is undergoing the worst quarterly growth when compared to previous five years. The median estimate of over 15 economists revealed that China's gross domestic product is forecast to have expanded by 7.2% in the third quarter of 2014.

The figures puts economic growth at its slowest pace since the first quarter of 2009 and well short of 7.5% expansion in the second quarter. According to survey results, China's full-year growth is expected to come in at 7.3%, below the government's target of 7.5%. The economists further say that the growth might dip further to 7% in 2015. The National Bureau of Statistics will announce official third quarter GDP figures on October 21.

China averaged growth of around 10% a year over the past three decades, moving it up in the list of biggest economies with increased household wealth. But currently, the pace of economic expansion is declining. The country recorded GDP growth of 7.7% in the last two years, while in 2011 the figure was 9.3% and in 2010 it was 10.5%.

Experts suggest that China's GDP growth remains the most comprehensive gauge of the nation's economic health. The Chinese government is working hard to reform the economy and shift to consumption-driven growth after years of exponential expansion. The government is continuously adopting incremental measures to boost the economy, experts said, while adding that the recent poor

key economic data, however, has added to concerns that China will fail to meet its growth target.

Some economists surveyed have identified the real estate sector as the biggest risk to the Chinese economy. After years of remarkable development, the sector in present times suffers from excess supply, slack investment and falling property prices.

Experts have also raised alarms over ballooning corporate debt, the CNNMoney survey reveals. Some China-based companies have defaulted on their debt in recent months - which was previously an unheard phenomenon in the country - and there have been no news about any possible government bailouts for these firms.

The use of unconventional financing was also noted as one of the reasons, with some firms being reported to have used copper as collateral to secure loans. Experts are concerned that some companies are even using the same copper stockpiles to take out multiple loans, borrowing far more than they can repay.

Economists, while responding to reports which said that the government is planning to replace central bank governor Zhou Xiaochuan, said that any move to replace Zhou would be made because he is already past retirement age and not because of policy disagreements. Such a personnel change is unlikely to happen in 2014 and isn't expected to bring a policy shift, an analyst claimed.

Commenting on the pro-democracy protests that have shaken Hong Kong, which is said to be the world's third most important international financial center, over the last three weeks, economists say that the Chinese economy will see no or limited short-term impact from them. They added that in the coming future, if Hong Kong loses its reputation as a trusted gateway for foreign capital to enter China, then it could hurt Chinese firms' access to cheap foreign capital, and potentially hold back other financial reforms.


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