China: Economy slows in last quarter of 2011
January 17, 2012
In the fourth quarter, GDP expanded 8.9% over the same period the previous year (Q3: +9.1% year-on-year), which represents the slowest rate since Q2 2009 and adds weight to the view that China's economic growth is indeed moderating, but not dramatically. The reading slightly overshot last month's Consensus forecast of an 8.7% rise. For the full year 2011, GDP expanded 9.2%, below the 10.4% observed in 2010 but in line with market expectations. Although the National Bureau of Statistics does not provide a breakdown for GDP by expenditure, additional data suggest that private consumption, along with investment, remains the main economic growth engine. In the January-December period, urban fixed-asset investment growth, which includes capital and construction investment, moderated to 23.8% in nominal terms (January-September: +24.9% yoy). In addition, private consumption remains buoyant as retail sales growth accelerated to 17.1% (January-September: +17.0% yoy). Net exports, on the other hand, appear to have reduced their contribution in the fourth quarter, as export growth continued to moderate at a faster pace than imports. At the sector level, in the full year 2011 the industrial sector moderated to a 10.6% increase over the same period the previous year (January-September: +10.8% yoy), while services slowed to 8.9% (January-September: +9.0% yoy). Meanwhile, agriculture accelerated to 4.5% (January-September: +3.8% yoy). A quarter-on-quarter analysis corroborates the slight slowdown suggested by the annual figures, as GDP rose a seasonally adjusted 2.0% in the fourth quarter, below the 2.3% expansion recorded in the third quarter. The 12th Five-Year Plan, which was approved on 14 March 2011, set an economic growth target of 7% for the 2011-2015 period.