Date
22 January 2017
A man walks past a poster of Beijing's central business district at a construction site in the capital. The country's GDP grew 7.0 percent in the first quarter on an annual basis, a six-year low, as demand stayed weak. Photo: Reuters
A man walks past a poster of Beijing's central business district at a construction site in the capital. The country's GDP grew 7.0 percent in the first quarter on an annual basis, a six-year low, as demand stayed weak. Photo: Reuters

China first-quarter growth dips to six-year low

China’s annual economic growth slowed to a six-year low of 7.0 percent in the first quarter as demand stayed weak.

The latest figure, in line with analyst forecasts, raises expectations that authorities will roll out more policy stimulus to avert a sharper slowdown, Reuters reported.

In the last quarter of 2014, China’s economy grew 7.3 percent on an annual basis.

On a quarterly basis, economic growth slowed to 1.3 percent between January and March after seasonal adjustments, the National Bureau of Statistics said on Wednesday, compared with growth of 1.5 percent in the previous three months.

March factory output rose 5.6 percent from a year earlier, below the 6.9 percent seen in a Reuters poll, its lowest level since the global financial crisis in 2008.

Fixed asset investment, a key driver of the economy, grew 13.5 percent in the first quarter from a year earlier, the weakest expansion in the first three months of a year since 2000.

More bad news came from another major economic pillar, the real estate sector. Despite recent easing measures to boost mortgage borrowing and ease restrictions on housing purchases, property investment rose only 8.5 percent in the first quarter, down from 10.4 percent growth rate seen in the January-February period, which was a five-year low.

China’s stock indices, which have been on a historic rally since Beijing began easing monetary policy in November, were up slightly after the data release with the CSI300 index up around 0.4 percent.

Mainland investors have tended to celebrate weak economic data releases as they are seen as strengthening the case for more liquidity injections which would find their way into the stock market.

Chinese reform-minded leaders, while emphasizing the need to adapt to “a new normal” of slower but better-quality growth, have signaled growing concern about a deeper downturn that could fuel job losses and debt defaults.

Premier Li Keqiang said last week the world’s second-largest economy faces increased downward pressures and the government must “stand up to” such pressure to avoid an impact on employment and incomes.

China’s growth tumbled to 6.6 percent in the first quarter of 2009 when millions of migrant workers lost jobs. A massive stimulus package pulled the economy out of the slump but at the cost of saddling local governments with a mountain of debt.

Employment still holds up due to a faster-expanding services sector, but weaker growth and nagging factory deflation could force more manufacturers to cut jobs, analysts say.

“The problem of unemployment may show up if GDP growth continuously stays below 7 percent,” said Nie Wen, an economist at Hwabao Trust in Shanghai.

Earlier data showed consumer inflation remained tepid in March while factory deflation persisted.

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