GDP growth in world’s second-biggest economy declined to still-robust 8.1% in first quarter
China’s economic growth fell to its lowest level in nearly three years in the first quarter but analysts said the economy should rebound in coming months.
Growth in the world’s second-biggest economy declined to a still-robust 8.1% in the three months ending in March, data showed Friday. That was down from the previous quarter’s 8.9% and the weakest rate since the second quarter of 2009.
China’s rapid growth has declined steadily since 2010 as a slump in global demand battered its exporters and Beijing tightened lending and investment curbs to cool an overheated economy and surging inflation.
An uncontrolled slump could have global repercussions, hurting demand for oil, industrial components and consumer goods at a time when US and European growth are weak. It also might fuel political tensions in China as the ruling Communist party prepares for a sensitive, once-a-decade handover of power to younger leaders.
“This quarter’s growth was pretty weak,” said IHS Global Insight analyst Xianfang Ren. “Starting from next quarter, growth should strengthen.”
The World Bank and private sector analysts expect China to achieve a “soft landing” with growth rebounding later this year. But some worry growth might fall too abruptly, raising the risk of job losses.
Last year’s unexpectedly sharp plunge in demand for China’s exports due to US and European economic woes prompted communist leaders to reverse course and ease controls on bank lending to help struggling manufacturers.
“The ‘soft landing’ scenario is very likely,” said Frances Cheung, senior strategist for Credit Agricole CIB in Hong Kong.
The World Bank and International Monetary Fund expect 8.2% growth for China this year, below 2010’s explosive 10.4% expansion but far ahead of the low single-digit forecasts for the US, Japan and Europe.
Other data showed Chinese factory activity, retail sales and exports accelerating over the course of the first quarter, though still weaker than last year.
Industrial production rose 11.9% over a year earlier in March, up 0.5 percentage points from the January-February period. Retail sales rose 15.2%, also up 0.5 percentage points from the previous two months. Export growth rose two percentage points to 8.9%, though that was well below China’s double-digit rates in recent years.
“China’s economy is stabilising,” said Sheng Laiyun, a spokesman for the National Bureau of Statistics, at a news conference.
Data released on Thursday showed bank lending in March soared to just over 1 trillion yuan (£100bn), well above analysts’ forecasts.
On Thursday, the World Bank trimmed its growth forecast for China this year from 8.4% but said it expects the economy to avoid an abrupt downturn.
“The near-term challenge we see is maintaining this ‘soft landing’ that we see under way,” the bank’s lead China economist, Ardo Hansson, told reporters.