Chinese economy in slow down mode in wake of global meltdown

Beijing, Oct.21 : The global meltdown has affected China's booming economy too.

A CBS report says that while the Chinese economy is still growing, it is doing so at its slowest pace since 2003.

It quoted the National Statistics Bureau as saying on Monday that the economy has expanded by just nine percent in the third quarter, the slowest rate since 2003. By comparison, the economy grew 10.6 percent in the first quarter and 10.1 percent in the second quarter of 2008.

The government is still drafting specifics of broad plans to help counter the chill on the world's fastest growing major economy.

Details were scant. But the direction of the policy shift is clear: after years of struggling to curb lending and control spending on construction projects, an easing in China's politically sensitive inflation rate has freed its leaders to once again loosen the reins.

China is seeing the voracious global appetite for its exports dry up as consumers in the U.S. and Europe cut back on spending in the wake of the mortgage-debt meltdown. This poses a serious challenge to Beijing to keep job-creating growth on an even keel.

Exports have just begun to slow. Thousands of factories have already downed shutters and many workers have been left jobless.

The plans reported in China's state media call for boosting export tax rebates for labor-intensive products such as clothing and toys, appliances and machinery. Economists also expect the government to drastically boost spending on construction of basic infrastructure such as roads and public housing, as well as the rebuilding of the region devastated by the May 12 earthquake in central China.

The threshhold for personal income tax, now set at about 700 dollars may be raised further, the state-run newspaper China Daily reported on Tuesday.

Taxes on housing transactions and restrictions on lending for such purchases are among other moves to support the real estate sector, which has languished in recent months.

Interest rate cuts and reductions on reserve requirements are being encouraged to coax banks to lend more to the corporate sector.

The government has also pledged to step up farm subsidies and other help for rural dwellers.

ANI