BEIJING: China announced its slowest economic growth in at least a decade on Thursday, but analysts said there were some signs that the worst could be over for the Asian exporting giant.
The world’s third-biggest economy posted growth of 6.1 percent in the first quarter of the year, down from 6.8 percent in the final three months of 2008, underlining the impact the global crisis is having on China.
“The national economy is confronted with the pressure of a slowdown,” Li Xiaochao, spokesman for the National Bureau of Statistics, told reporters.
“The foundation is still not solid and we still have a daunting task in the coming period.”
He said problems included a decline in exports, a drop in corporate profits and unemployment.
The figure follows nine percent growth for all of 2008, reinforcing concerns that China this year will experience its slowest economic expansion in 19 years.
Officials have stressed that China’s economy needs to grow by about 8.0 percent this year in order to prevent social unrest triggered by widescale unemployment.
Before the global economic crisis struck, China had experienced double-digit growth from 2003 to 2007.
“The quarterly growth was the slowest in the past 10 years as the global financial crisis continued to affect the world’s fastest-growing economy,” the official Xinhua news agency reported.
Historical data from Beijing statistical authorities are patchy, but Goldman Sachs said growth in the first quarter was actually the slowest since data began being recorded in 1992.
Nevertheless, Li said there were some reasons for optimism, after China in November launched a four-trillion-yuan (580-billion-dollar) stimulus package to combat the global economic crisis.
“We have seen some positive changes and the results are better than expected,” said Li.
Most strikingly, urban fixed asset investments rose 28.6 percent in the first quarter, while in March alone the increase was 30.3 percent year-on-year, the bureau said.
Stephen Green, a China economist with British bank Standard Chartered, said China’s economy had bottomed out in the first quarter, and that the stimulus package was likely to see at least another two quarters of strong investment growth.
“It looks like we’ve already started to gain some forward momentum,” he said.
“The key is whether the consumer keeps spending and whether the private sector starts to invest,” said Green.
“Those are the two key things that we need to happen for this recovery to be sustainable.”
Yu Song, an analyst with Goldman Sachs, also sounded a cautious note of optimism.
“The policy stimulus effects have come even earlier and stronger than we previously expected,” Yu said in a research note.
Industrial output expanded 5.1 percent in the first quarter of 2009 from a year earlier, but heated up to 8.3 percent growth in March, the government said.
Despite the signs of a pickup, worldwide economic woes have left China, which last year worried that inflation might be too high, facing deflation.
The consumer price index (CPI), which measures the cost of living and is China’s main gauge of inflation, fell 0.6 percent in the first quarter of 2009 from a year earlier, according to the bureau.
In March the CPI was down 1.2 percent from a year ago. Compared with February it fell 0.3 percent, the bureau said.
The CPI grew 5.9 percent in 2008 but has weakened significantly in recent months.
