China growth slows to 7.7% in first quarter

BEIJING - China's economic growth slowed to 7.7 per cent in the first quarter, the government said Monday, a surprise result that came in below expectations and raised concerns the nation's recovery is faltering.

The figure for the three months to March, announced by the National Bureau of Statistics, compared with a median 8.0 per cent forecast for the world's second-largest economy in a poll of 12 economists by AFP.

China's economy expanded 7.9 per cent in the fourth quarter of last year, snapping seven straight quarters of slowing growth and fuelling optimism for a solid recovery while other major economies remain relatively weak.

In a statement the NBS cited "the complicated and volatile economic environment at home and abroad", adding that China's ruling Communist Party and government were committed to "making progress while ensuring stability".

Wendy Chen, a Shanghai-based economist at Nomura Securities, told AFP: "The (GDP) figure was lower than market expectations, indicating the recovery in the real economy was not on a solid foundation and remained weak."

She added that given concerns about inflation rising in the next few months it was unlikely the central bank will move to stimulate the economy by cutting interest rates "as loosening monetary policy may bring greater inflationary risks".

The government "will likely take steps on the fiscal policy side, possibly continuing to promote investment in infrastructure construction", she said.

China's economy grew 7.8 per cent in 2012, its slowest rate in 13 years, and authorities have kept their growth target for 2013 at a conservative 7.5 per cent.

The country's leaders have vowed to rebalance the economy away from reliance on the traditional growth drivers of investment and exports, and towards consumer demand.

But fixed-asset investment, a key measure of government spending on infrastructure, jumped 20.9 per cent in the first quarter from the same period in 2012, the NBS said.

Industrial production rose 8.9 per cent year-on-year in March and 9.5 per cent in the first quarter, the NBS added, while retail sales were up 12.6 per cent in the month and 12.4 per cent in the first quarter.

The surprise GDP figure came after Chinese President Xi Jinping last week expressed confidence in the country's economy, telling business leaders it was in "good shape".

He said China will probably not be able to sustain the "ultra-high speed of economic growth" of the past, but that a "relatively high speed of economic growth" will be possible.