Growth in the world’s second-largest economy has slowed to a six-year low of 7 percent. But these new figures were not as bad as some investors had feared following poor trade performace last month.
In a further sign that China’s economic slowdown is continuing, economic growth fell to its lowest rate since the global financial crisis six years ago.
Official data released Wednesday showed growth in the world’s second-largest economy came in at 7.0 percent for the first three months of the year, down from 7.3 percent in the previous quarter.
The disappointing figures reflected slowing manufacturing and retail sales. They came in the wake of other weak indicators including February’s trade figures, although slightly above a forecast of 6.9 percent.
It was China’s lowest posted growth rate since first-quarter 2009, when growth dropped to 6.1 percent as the world economy ground to a halt following bank collapses around the world brought on by a property bubble.
Some of today’s decline is due to official policy that came in response to that decline. To head off worries of overheating, China’s communist leaders appear comfortable with a lower growth rate. They have tried to steer the economy toward a growth model that relies on domestic consumption rather than trade and foreign direct investment (FDI).
“If the Chinese market were to double from here it would indeed be in bubble,” James Griffiths of Citi Research said in a commentary Wednesday. “The same is true for Asia.”
But a further decline threatens job creation, a key factor in the social stability prized by the Chinese authorities. Many economists say the government may have to step in to stimulate the economy.
“The weaker Q1 GDP growth and much weaker-than-expected March activity data suggest that growth momentum remains weak, which calls for further policy easing,” Nomura analysts led by Yang Zhao wrote in a note.
Statistics bureau spokesman Sheng Laiyun said Wednesday that China’s survey-based unemployment rate stood at 5.1 percent, without specifying the time period.
Asian markets were mostly down slightly following the news. The Shanghai Composite Index dropped 1.1 percent to 4,089.52, while Hong Kong’s Hang Seng index lost 0.1 percent to 27,547.60.