China: Economy moderates to slowest pace in almost three years
April 13, 2012
In the first quarter, GDP grew 8.1% over the same period last year, which was below the 8.9% rise observed in the fourth quarter and represented, in fact, the slowest expansion seen since Q2 2009. Moreover, the reading undershot market expectations that had economic activity slowing to 8.4%. Although the National Bureau of Statistics does not provide a breakdown for GDP by expenditure, additional data suggest that both private consumption and investment moderated at the outset of the year. In the first quarter, urban fixed-asset investment growth, which includes capital and construction investment, moderated to 20.9% in nominal terms (2011: +23.8% year-on-year). In addition, private consumption also grew at a slower pace, with retail sales adding a nominally 14.8% in the first quarter (2011: +17.1% yoy). Net exports, on the other hand, appear to have increased their contribution to overall growth in the first quarter, as import growth slowed more than exports. Economic activity by production showed that all the main sectors moderated compared to the previous year. The industrial sector grew 9.1% in the first quarter (2011: +10.6% yoy), while services rose 7.5% (2011: +8.9% yoy). Meanwhile, agriculture grew a milder 3.8% (2011: +4.5% yoy). A quarter-on-quarter analysis corroborates the slowdown suggested by annual figures, as GDP rose a seasonally adjusted 1.8% in the first quarter, slightly below the 1.9% expansion recorded in the fourth quarter. The government has set an economic growth target of 7.5% for this year. Moreover, the 12th Five-Year Plan, which was approved on 14 March 2011, set an economic growth target of 7% for the 2011-2015 period.