China warned on Thursday its economic downturn was deepening with the spread of the global financial crisis, raising the spectre of job losses and social unrest in the world's most populous nation.
The warnings from the country's top planner came a day after China's central bank slashed interest rates by the biggest margin in 11 years to shield its economy from the worst global downturn in decades.
On Wednesday the People's Bank of China cut interest rates for the fourth time since mid-September in order to stimulate economic growth.
The rate cut, which comes into effect on Thursday, will see rates fall to 5.58% from 6.66%. The BBC reports it is the biggest cut in the cost of borrowing in China since October 1997, during the Asian financial crisis.
The crisis that began last year with the collapse of the US housing market has spread around the world, bringing several top financial institutions to their knees and pushing the United States, Japan and Europe into recession or to the brink of it.
China's economy, the world's fourth biggest, is still expanding, but the growth engine is sputtering, hit by a sharp drop in demand for its exports. This quarter is expected to be its worst in three years.
"The global financial crisis has not bottomed out yet. The impact is spreading globally and deepening in China. Some domestic economic indicators point to an accelerated slowdown in November," Zhang Ping, chairman of the National Development and Reform Commission, said on Thursday.
The State Information Centre, a government think-tank, forecast annual growth would slow to 8% this quarter from 9% in the third quarter, still a respectable figure but a far cry from blistering double-digit growth rates recorded in the past five years.
With factories closing by the thousands, Chinese officials have grown increasingly concerned in recent weeks that slowing growth may threaten the stability that the ruling Communist party craves for its 1.3 billion people.
"Excessive bankruptcies and production cuts will lead to massive unemployment and stir social unrest," Mr Zhang warned.
He said Wednesday's 108 basis point rate cut would reinforce the impact of the government's 4 trillion yuan stimulus package unveiled earlier in November.
The package that aims to boost domestic demand over the next two years and offset the slump in exports, should boost growth by about 1 percentage point each year, he said.
China's unexpectedly big rate cut helped Asian stock markets chalk up a fifth gain in a row, even as India, Asia's other new economic power, was shaken by militant attacks in the financial capital Mumbai that killed at least 100 people.