Dec. 31 (Bloomberg) -- Chinese stocks fell for an eighth day, with the benchmark completing its first annual decline as economic growth cooled and exports and industrial production shrank.

China Eastern Airlines Corp., the nation's third-largest carrier by fleet size, dropped 8 percent after incurring a loss from hedging against fuel-price fluctuations. Shanghai Haixin Group Co., a Chinese textile exporter, slid 8.7 percent after saying it will probably post a loss this year because orders from overseas declined.

The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, retreated 15.71, or 0.9 percent, to 1,817.72 at the close. It has lost 66 percent this year, after more than doubling in each of the past two years since it was introduced in April 2005. The stock market is closed for the rest of the week for the New Year holiday.

``This year's loss has exceeded anyone's expectations and you've got nearly no opportunity to make money from the market,'' said Fan Dizhao, an investment manager at Guotai Asset Management Co. in Shanghai, which oversees the equivalent of $4.7 billion. ``A steep economic slump and high stock valuations were the major triggers for the meltdown.''

The index is valued at 12.6 times reported earnings, about a quarter of its valuation peak in October last year. It's still Asia's second-most expensive benchmark after Japan. The Shanghai Composite Index, which tracks all the stocks trading on the mainland's bigger stock exchange, has slumped 65 percent, the biggest annual decline since Bloomberg began tracking the data in 1996.

Slowing Growth

China's economy expanded 9 percent in the third quarter, the slowest pace in five years. Industrial output grew the least since 1999 in November, exports fell for the first time in seven years and inflation was the weakest in almost two years, reports showed earlier this month.

China Eastern slid 8 percent to 4.13 yuan, bringing its decline to 81 percent this year. The carrier said it incurred a loss of $420,000 from the settlement of aviation fuel hedging contracts in November. Haixin Group retreated 8.7 percent to 2.83 yuan, falling for a fifth day and taking the stock's loss to 80 percent this year.

Hainan Airlines Co., a Chinese carrier backed by U.S. billionaire George Soros, retreated 8 percent to 3.12 yuan. China Southern Airlines Co., the nation's biggest carrier by fleet size, lost 3.6 percent to 3.19 yuan.

Best, Worst Performers

Only one stock gained for the year on the 300-member CSI 300. Zhejiang China Commodities City Group Co., an investment holding company that provides merchandise retail services, advanced 27 percent in 2008. The shares fell 0.2 percent to 54.88 yuan today.

Sichuan Hongda Chemical Industry Co., China's third-largest zinc producer, is the worst annual performer on the measure, sliding 87 percent as a May earthquake and lower metal prices ate into earnings. The stock lost 2.7 percent to 5.10 yuan.

China Sports Industry Group Co., a producer of sporting goods, tumbled 86 percent this year, the second-worst performing stock. The shares sank 5.4 percent to 4.95 yuan.

Yunnan Copper Industry Co., the country's third-biggest producer of the metal, dropped 85 percent this year, making it the third-worst performing stock. It fell 4.2 percent to 8 yuan today after saying it halted production at its largest smelter on Dec. 25 to repair a boiler leak.

Poised to Rise?

Investors with $63 billion of developing-nation stocks put 15 percent of their funds into China, more than Brazil, Taiwan or South Korea and the most in 13 years, according to data compiled by EPFR Global last month.

Templeton Asset Management Ltd., Schroder Investment Management and BlackRock Inc. say they're adding to holdings in China, betting plans to stimulate growth will lead a stock market recovery. The Chinese government last month unveiled a 4 trillion yuan spending plan to build railways and low-rent houses and cut the lending rate the most in 11 years.

Chinese companies all rose in their domestic market debuts this year, with some stocks posting smaller gains after the second quarter, data compiled by Bloomberg showed.

A total of 76 companies had first-time stock sales on the mainland's two exchanges in 2008, down from 118 last year, according to Bloomberg data. The initial share sales this year raised 103.4 billion yuan ($15 billion), less than a quarter of the 446.5 billion yuan in 2007, the data showed.

China stocks are poised to rise in 2009 as the government is expected to unveil measures such as tax cuts and a fund to invest in equities, HSBC Jintrust Fund Management Co., HSBC Holdings Plc's local venture, said in a report last week, advising investors to buy consumer and energy-saving stocks.

The following shares were among the most active in China's markets. Stock symbols are in brackets after companies' names.

China Minsheng Banking Corp. (600016 CH), the nation's first privately owned bank, added 0.01 yuan, or 0.3 percent, to 4.07. The bank said it will write off 365 million yuan of bad loans, comprising the principal and unpaid interest, from four companies.

China Railway Construction Corp. (601186 CH), the builder of more than half of the nation's rail links since 1949, added 0.12 yuan, or 1.2 percent, to 10.04. China Railway said it won a 7.08 billion yuan contract to build a railway linking the southwest city of Chongqing to Lichuan in central Hubei province.

Fuyao Group Glass Industries Co. (600660 CH), China's biggest auto-glass maker, dropped 0.13 yuan, or 3.2 percent, to 3.89. The company said it will stop two production lines in Hainan province because of lower demand. The company will also set aside as much as 120 million yuan in asset provisions, it said.

Huaneng Power International Inc. (600011 CH), the listed unit of China's largest power group, rose 0.10 yuan, or 1.5 percent, to 6.92. Huaneng Power said it has received approval for an 890 million yuan, 80 megawatt hydropower plant in Hunan from the province's planning agency.

Jiangxi Copper Co. (600362 CH), China's second-biggest producer of the metal, declined 0.36 yuan, or 3.5 percent, to 9.98. Jiangxi Copper said damage to an oxygen generator at its Guixi plant has affected 20 percent of the smelter's total production capacity.

Zijin Mining Group Co. (601899 CH), China's largest gold producer, gained 0.03 yuan, or 0.6 percent, to 4.80. Zijin Mining said its board approved a proposal to start negotiations with its major shareholder to form a 2.6 billion yuan venture to build a copper refinery.

To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

Last Updated: December 31, 2008 03:29 EST