Tuesday 17 January 2012

China's economic growth slows to 8.9% in fourth quarter


China's economic growth slows to 8.9%

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China's economy, the world's second-largest, grew at its slowest pace in more than two years, latest government figures show.
Gross domestic product expanded by 8.9% in the three months to the end of December, from a year earlier. That is down from 9.1% in the previous quarter.
The statistics bureau data showed that growth for the full year was 9.2%, down from 10.3% in 2010.
Analysts said they expect the economy to slow further this year.
"Looking at the rest of 2012, you are going to see an even sharper slowdown in the first quarter because of the effect of monetary tightening," said Arjuna Mahendran, chief Asia strategist at HSBC Private Bank.
"It will pick up later in the year."
Growth concerns China has previously been one of the fastest-growing economies in recent years.
However, stimulus measures implemented by the government have created the risk of asset bubbles developing and China is looking at ways of gently slowing growth to what it sees as more sustainable levels.
These measures have included a curb on lending to prevent overheating in the property and investment markets, and tightened monetary supply.
Tuesday's data showed that real estate investment in China rose 27.9% in 2011, down from an annual growth rate of 29.9% between January and November, the National Bureau of Statistics said.
A worker operates machines for making yarn at a textile factory in China's Anhui province Slowing exports to Europe and the fear of property bubbles have hindered growth
However, it is not just domestic factors influencing growth. Another reason for the slide is the slowdown in exports because of weakening demand from Europe and the US.
Data showed output from factories and workshops in the country rose 13.9% for all of 2011, which is a slower pace than in 2010.
Sustainability Some analysts are now calling for China to alter its growth strategy towards more sustainable levels, even if it is slower.
"If you look at the composition of the growth, it is overwhelmingly delivered by an investment boom," said Patrick Chovanec, associate professor at Tsinghua University's School of Economics and Management in Beijing.
"They have to focus on a sustainable development path, away from investment and more focussed on domestic markets here in China".
Chinese authorities have been trying to boost levels of domestic consumption to reduce the country's reliance on exports.

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