China Slows Down; Falling Prices, Profits and Oil Demand Signal That the Breakneck Boom Is Shifting to a Safer Speed

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Byline: Melinda Liu (With Steve Glain in Washington, John Sparks in New York and Jonathan Ansfield in Beijing)

These days the word "slow" is not often paired in the same sentence with the famously roaring Chinese economy. Indeed, Beijing has been trying for two years to restrain the excesses of a country growing at the precipitous pace of 9.5 percent. Yet there are emerging signs that the campaign is starting to work. Inflation is slowing, particularly in go-go housing markets like Shanghai's, and for the steel that goes into so many of China's exports. Investment in roads and factories is cooling. When China's imports actually shrank in March, some economists predicted a drop in the growth rate, to as low as 7 percent. Analysts at RAND Corp. predict China will grow at a rate of 7 to 8 percent annually for the next five years. And Andy Xie of Morgan Stanley recently cited the "dramatic" slip in China's oil imports as one of the most visible signs that "the China slowdown has begun."

The impact on the world would depend, of course, on the scope of the slowdown. China …