BEIJING — The reaction was slow in coming, but financial markets and corporate bosses have been jolted awake to China’s relentless growth decline and are scrambling to cope with wrenching changes in global business.
For the past decade, China poured money into building factories, highways, and apartment blocks. That propelled explosive growth at home and a flood of money to exporters of iron ore and other commodities such as Australia and Peru.
But now, Beijing has put the brakes on that boom. Like a captain turning a heavy ship in choppy seas, its leaders are trying to steer the world’s second-largest economy away from reliance on investment and toward being a consumer society.
Growth has marched steadily downward over the past two years as Beijing clamped down on a spending boom that analysts worry has pushed debt to dangerous levels. That has meant less Chinese demand for imported goods from copper and cement to factory machinery and earth movers.
China is far from falling off a financial cliff, but last year’s 7.7 percent growth was barely half of 2007’s 14.2 percent. Global stock markets slid after an unexpected fall in January manufacturing drew attention to the depth of the slowdown. Growth looks set to fall further amid weakness in trade, retail sales, and manufacturing.
“The growth slowdown this year will be faster than many expect,” economist Diana Choyleva of Lombard Street Research said in a report.
Already, slumping Chinese demand has led to job cuts at mines in Australia and elsewhere. Other companies that looked to China to drive revenues are cutting sales forecasts. Some have pulled out and profits are down, possibly endangering jobs abroad.
As for Chinese companies, they face tougher competition at home. That, combined with weaker investment, could lead to job or wage cuts if Beijing fails to manage the challenges of its transition. That might hurt consumer spending, leading to a downward spiral.
China’s voracious appetite for commodities propelled a boom in Australia and emerging economies in Africa and Latin America. With revenues down, exporters are cutting jobs and governments are tightening their spending.
The International Monetary Fund has reduced its 2014 growth forecasts for South Africa, Brazil, the Middle East, and Southeast Asia. Caterpillar Inc. has cut 13,000 jobs, blaming slower Chinese growth and weak spending by miners.
China is the biggest market for Volkswagen AG and some other automakers. Yum Brands, the US-based operator of Pizza Hut, KFC, and Taco Bell, already gets half its revenue from China. But US and European companies are being squeezed by tougher competition and by Beijing’s efforts to limit access to promising industries such as clean energy.
Cosmetics brand Revlon Inc. says it will pull out of China. Actavis PLC, a generic drug maker, is leaving too. Sales of Swiss watches in China fell last year after an anticorruption crackdown crimped gift-giving.
The Communist Party has promised to open more industries such as Internet commerce and logistics to foreign competitors. But previous market opening efforts have been tempered by conditions that include handing technology to potential Chinese competitors.