China’s economic growth tumbled to its lowest rate in more than three years last month. The world’s second-largest economy grew 7.4% in the three months ending in September 2012, down from the previous quarter’s 7.6%. This was the lowest growth for Beijing since the first quarter of 2009. The Chinese economy has been stumbling for months, due largely to government lending and investment controls imposed to cool an overheated economy and inflation. However, the downturn worsened sharply last year after global demand for Chinese goods plunged unexpectedly.
China must boost its productivity if it hopes to achieve sustainable growth in the face of rising labour costs in the long term. The average labour cost in China has nearly doubled in the past five years, going from less than 25,000 yuan ($3,960) a year at the beginning of 2007 to more than 40,000 yuan a year in 2011. Commodity prices in China have increased 51% in the last five years, and energy prices were up 77%.
