China’s economic growth rate has halved in 18 months. We estimate that GDP increased by little more than 6% y/y in the fourth quarter after 9% in the third and a peak of 12.6% in the second quarter of 2007. Yet exporters are only just starting to suffer, which suggests that there is worse to come. We think that growth could fall as low as 5% this year. Such slow growth would prompt a sizeable government response, in the form of the tax cuts and big genuine increases in government spending that Beijing has been reluctant to consider so far. But it will be the end of the year before these measures make much difference. This is more bad news for commodities producers. It also makes renminbi depreciation more likely.