China Posts Worst Growth for Quarter in Seven Years

China is starting off rough in 2016. The second largest economy in the world grew at its slowest pace in the past seven years during the first three months of 2016, showed data from surveys with economists.

The gross domestic product is expected to have grown by 6.6% during the first three months of the year, in comparison with the same three months of last year.

That would mark the weakest quarter for China since the days of 2009 and the deep financial crisis.

For the complete year, economists are expecting growth in the GDP to slow even further to just over 6.3% and to fall short of the target of the government of between 6.5% and 7%. That is in comparison with an annual expansion in 2015 of 6.9%.

Official data of the GDP for the first three months will be published on Friday by the National Bureau of Statistics in China.

After many years of huge growth, the economy in China is now starting to cool down quickly, in part because of government efforts to shift the growth engine in China from manufacturing to services.

In addition, China is burdened with very high debt levels following aggressive lending for a number of years.

The success of the economic rebalancing of China over the upcoming years will be dependent on the ability of policymakers to maintain levels that are adequate of liquidity in the financial systems while lowering bank debt as well as boosting the bond market in the country, said on Wall Street analyst.

Much of the data on the economy issued thus far in 2016, from manufacturing to trade activity so a mediocre growth pattern.

Some of that weakness is attributed to this year’s Lunar New Year, which took place in during early February and at that time factories and businesses shut down.

However, the pain is wide in China. The country announced late in February that it planned to shed over 1.8 million jobs in the steel and coal industry to lower the excess in capacity. Those cuts represent more than 11% of the steel and 20% of the coal industry  workforce.

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