China’s First-Quarter Growth Slowest in Six Years at 7%
China’s GDP hasn’t been this sluggish since the midst of the financial crisis
BEIJING—China’s economy started the year on a downbeat note, with its slowest quarterly growth rate since 2009, pointing to a further loss of momentum for the world’s second-largest economy.
The 7% first-quarter on-year growth rate marks a slowdown from 7.3% in the fourth quarter. It puts more pressure on economic planners to ease fiscal and monetary policy, even as they try to avoid excessive stimulus that could boost debt and fuel more overcapacity in real estate and heavy industry.
Economic Growth Is Slowest in Decades
The growth figure—the second-lowest since 2001—affords Beijing little cushion in hitting its 7% annual growth target. Other figures released on Wednesday suggest further weakness in the economy, which could prompt Beijing to act. “This really shows they’re going to defend the annual target,” said Mizuho Securities Asia economist Shen Jianguang.
China’s National Bureau of Statistics reported Wednesday that growth in industrial production, fixed asset investment and retail sales in March all were below economists’ expectations.
Beijing’s growing concern over diminished growth has prompted it in recent months to boost infrastructure spending, reduce electricity tariffs and twice cut interest rates, lowering the borrowing cost for domestic companies.
“The downward pressure on economic growth continues to increase,” Premier Li Keqiang said at a meeting with economists and business leaders Tuesday. He added that growth remains within a “reasonable range.”
Economists say they expect Beijing to enact further interest-rate and bank-reserve cuts to prop up growth. “They still have plenty of ammunition left,” said IHS Global Insight economist Brian Jackson.
Beijing faces a delicate balancing act as it tries to make the economy more consumer-driven and environmentally sustainable, while ensuring that job growth remains high enough to prevent widespread unemployment and social unrest.
The growth figure is the latest in a parade of bleak numbers. Economists called this week’s sharp drop in March exports “shockingly weak” and an “unexpected plunge.” March credit data was unusually grim, even as the property market and domestic demand continue to flag.
Still, China remains a major global-growth driver. Despite slower growth last year of 7.4%, its slowest pace in nearly a quarter century, China’s $10 trillion economy is five times bigger at current exchange rates than it was a decade ago and contributes twice as much to global growth as the U.S.