A string of stimulus measures are likely to not fully kick in until the second or third quarter of 2009, making the last quarter of this year and the following three months the toughest to pull through, they said.

A range of economists contacted by AFP forecast growth of between five to 6.5 percent in the fourth quarter of this year.

"Our forecast is rather pessimistic," said Tao Dong, an analyst with Credit Suisse in Hong Kong, who forecast growth in the final three months of 2008 to be six to 6.5 percent.

He said China had not posted growth that low since the country began publishing quarterly economic data in 1995.

Before that, the country recorded full-year growth of 3.8 percent in 1990.

It then roared into gear and never again posted annual growth of less than 7.6 percent, even during the Asian financial crisis.

Xing Ziqiang, a Beijing-based economist with China International Capital Corporation, backed Tao's assessment that the last three months of 2008 would likely see the worst economic growth since records began, and possibly longer.

Xing forecast growth of five to 5.5 percent in the final quarter.

China published a series of economic data for November over the past week that showed the world's fourth largest economy was feeling the impacts of the global crisis much harder than initially expected.

Among the chief concerns, exports posted their first fall in more than seven years, dropping 2.2 percent in November after growing 19.2 percent in October.

The inflation rate also dropped abruptly to a 22-month low of 2.4 percent in November from 4.0 percent in October, reversing worries on soaring prices seen early this year and raising the spectre of deflation.

Meanwhile, industrial output growth eased dramatically last month to 5.4 percent, compared with this year's peak of 17.8 percent in March.

The latest data, released on Tuesday, showed urban fixed asset investment -- a key measure of spending on productive capacity -- rose 26.8 percent from January to November, down 0.4 percentage points from the first 10 months.

Beijing has taken many measures to boost domestic demand and cushion the impact of collapsing export markets, including four interest rate cuts since September that reduced the one-year lending rate from 7.47 percent to 5.58 percent.

A 586-billion-dollar stimulus package was also announced in November that focused heavily on big infrastructure projects.

In its latest effort, the government said over the weekend it would raise money supply by 17 percent next year.

However economists said it would take many months for the impacts of such measures to kick in, with much of the new spending on projects such as railway construction.

Amid this backdrop, the government is expected to act again soon.

Chinese central bank governor Zhou Xiaochuan said on Tuesday there was room for more interest rate cuts, indicating another one could come late in December or early next year.

More plans to cut taxes, increase credit to small and medium-sized companies and subsidise low-income families are also likely to come out, depending on how the economy responds to current stimulus measures, economists said.

Nevertheless, China's economy, after posting double-digit growth for the past five years, is still widely forecast to absorb the global crisis better than much of the rest of the world.

Huang Yiping, an economist with Citigroup in Hong Kong, forecast growth of 8.2 percent in 2009, and said the stimulus measures were an important factor.

"It would be even lower without the policies," he said.

BNP Paribas has forecast an expansion of 7-8 percent for China's economy next year.

related report
China fixed asset investment up 26.8 percent Jan-Nov: govt
China's urban fixed asset investment rose 26.8 percent in the first 11 months of 2008, the National Bureau of Statistics said Tuesday, indicating a slight slowdown in November.

Fixed-asset investments in cities -- a key measure of spending on productive capacity -- were 12.8 trillion yuan (1.9 trillion dollars) for the period, the bureau said.

The bureau did not provide a figure for November alone but in the first 10 months of the year, urban fixed asset investments were up 27.2 percent.

Investment in real estate in the 11 months increased by 22.7 percent, down from growth of 24.6 percent in the first 10 months, highlighting a weakening domestic demand despite government policies to help sales.

Investment in projects approved by the central government rose 31.8 percent in the period, up from the 28.7 percent seen in the first 10 months, the bureau said, as Beijing sought to pump prime the slowing economy.

However, investment in projects approved by local governments increased by 26.3 percent, slower than the 27.1 percent booked from January to October.

Bank loans for fixed-asset investments were up 11.7 percent in the first 11 months, while funds raised by the companies themselves -- for instance in the form of reinvested profits -- were up by 32.6 percent.

By contrast, foreign funding earmarked for fixed-asset investment rose by just 5.2 percent, down from 5.8 percent in the first 10 months.

China has introduced a string of policies aimed at curbing the deceleration of its economic growth, which dropped to nine percent in the third quarter and is expected to be even lower in the fourth quarter.

In its latest attempt to fight the global downturn, the government said over the weekend that it would raise money supply by 17 percent next year, boost policy loans by 14.6 billion dollars and urge commercial banks to lend more.

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