New economic reality sets in as China’s boom loses steam; leaders announce $586B stimulus package

Job cuts, factory closures, unpaid export shipments – stalling worldwide demand for products made-in-China is driving home a new economic reality for businesses that until recently were struggling to keep up with soaring exports.

China’s economy is still growing at an enviable rate: It expanded 9 percent in the quarter through September. But that was the slowest in five years and down from 11.9 percent last year. Forecasts for next year range as low as 7.5 percent.

“The Golden Years have shuddered to a dramatic halt and much tougher times are upon us,” Stephen Green, economist at Standard Chartered Bank in Shanghai says, pointing to slowing exports and investment.

The suddenness and severity of the chill from the global slowdown prompted leaders to announce late Sunday a $586 billion economic stimulus package aimed at boosting growth in China’s own markets.

“This broad-based fiscal stimulus program will emerge as the government’s front line of defense against an excessive economic slowdown,” Jing Ulrich, J.P. Morgan & Co.’s chairwoman for China, said in a note to clients.