Chinese leader says China losing competitive edge

BEIJING - Chinese President Hu Jintao warned that China has started to lose its competitive edge in trade amid the global financial crisis, as he told Communist Party leaders the challenge posed a test to the government's ability to rule, state media reported.

China's economic growth is expected to fall to about 9 percent this year, down from last year's 11.9 percent. That would be the fastest of any major economy, but Chinese leaders worry about possible unrest as unemployment rises, especially in export industries where factories are shutting down as global demand plummets.

"External demand has obviously weakened and China's traditional competitive advantage is being gradually weakened," Hu said, according to the Communist Party's official People's Daily newspaper.