China's Q1 GDP growth hits 3-year low
GOV.cn Friday, April 13, 2012
 
A worker produces glass in a factory of Tancheng County in Linyi, east China's Shandong Province, March 1, 2012. China's economy expanded 8.1 percent year-on-year in the first quarter of 2012, slowing from 8.9 percent in the fourth quarter of last year, the National Bureau of Statistics (NBS) said Friday. According to preliminary statistics, the country's GDP reached 10.7995 trillion yuan (1.72 trillion U.S. dollars) during the period. (Xinhua/Zhang Chunlei)

China's economy expanded 8.1 percent year-on-year in the first quarter of 2012, slowing from 8.9 percent in the fourth quarter of last year, the National Bureau of Statistics (NBS) said Friday.

The figure, which marked the fifth consecutive quarter of decline, revealed the slowest growth pace since the third quarter of 2009 and failed to match market expectations of 8.3 to 8.5 percent.

Despite a lackluster GDP figure, other economic data released Friday showed signs of stabilized growth, and the slowdown may prompt more government fine-tuning polices to cushion the economy, analysts said.

On a quarterly basis, the country's economy grew 1.8 percent in the first three months of this year, NBS spokesman Sheng Laiyun said at a press briefing on March's economic figures.

According to preliminary statistics, the country's GDP reached 10.7995 trillion yuan (1.72 trillion U.S. dollars) during the period.

SIGNS OF STABILIZED GROWTH

Views were divided on whether the GDP figure has bottomed out the economy's growth, but analysts said the growth rate remains healthy and the economy is heading toward stabilized growth.

Sheng said the first quarter growth rate was not low compared with other economies and it showed gains against the backdrop of faltering global economic recovery and new conditions emerging domestically, including operations difficulties among small and medium-sized enterprises.

Challenged by a sluggish external market, China lowered its full-year growth target for 2012 to 7.5 percent in early March, after its economy grew 9.2 percent year-on-year last year.

"Speaking of absolute GDP increase, the first quarter growth is still remarkable," said Yin Jianfeng, a researcher at the Institute of Finance and Banking under the Chinese Academy of Social Sciences.

Although the GDP figure has further slowed from last year, other figures for March indicate that the economy's growth momentum started picking up, said Liu Ligang, director of the economic research department of ANZ Greater China.

Sheng shared this view, citing positive month-on-month growth in the country's major economic indicators.

In March, industrial value-added output grew 11.9 percent year-on-year, higher than the 11.4 percent recorded in the first two months. Retail sales grew 15.2 percent, an increase of 14.7 percent from the January to February period, Sheng said.

Fixed asset investment rose 20.9 percent year-on-year in the first quarter, dropping 0.6 percentage point from the January to February period. But its real growth after deducting price factors still exceeded that registered during the January to February period, he noted.

"We believe the economy will continue to maintain moderately steady growth in the future, because the country's economic fundamentals have not changed," the spokesman said.

Sheng explained that the country is still undergoing a rapid process of industrialization, urbanization, marketization and internationalization, which will unleash huge investment and consumption potential.

MORE FINE-TUNING EXPECTED

The slowdown came as the world's second largest economy implemented measures to cool inflation and its property market and struggled with a persistently sluggish external market.

Official data showed that investment in the property sector rose 23.5 percent year-on-year in the first quarter, down from 44.1 percent last year. Foreign trade grew 7.3 percent during the same period, registering the slowest pace since the fourth quarter of 2009.

"The government should adopt more active fine-tuning monetary policies as inflation pressure becomes a less important issue," said Zhang Liqun, a researcher with the development research center of the State Council.

Zhang said the country needs to properly adjust its monetary policy to meet credit demands, as investment dropped in the country's infrastructure construction sector and was unstable in the manufacturing sector hit by shrinking exports.

The government has already moved to strengthen its support for the real economy, with its new yuan loans trumping forecasts to hit a 14-month high of 1.01 trillion yuan in March, central bank data showed.

"The country will continue to fine-tune its monetary policy by injecting more liquidity, but the policy will stay prudent in general as consumer prices rebounded in March," said Wang Yuwen, a researcher at the finance research center of Bank of Communications.

The country's consumer price index, a main gauge of inflation, rose 3.6 percent year-on-year in March, up from a 20-month low of 3.2 percent in February.

Wang expected a 50-basis-point cut in banks' reserve requirement ratio (RRR) in the second quarter and two more later this year, but said that interest rates will likely stay unchanged.

To ease the credit crunch, the central bank in February cut the RRR by 50 basis points, the second cut in three months.

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Editor: An Lu
Source: Xinhua