China’s economic growth slowed sharply in the first three months of this year, but recent efforts by policymakers to jump-start its economy, the world’s second largest, appear to be bearing fruit, with industrial and retail activity both rising during March, new data released Friday showed.
The economy expanded 8.1 percent compared to a year earlier, significantly slower than in previous quarters, and a sharp cooldown from the double-digit expansion seen in much of the past decade.
That was markedly below analysts’ expectations for an increase of 8.4 percent, and it underlined the problems that China faces on two fronts. Domestically, demand has weakened, and the all-important construction sector has slowed, in large part because of government efforts to curtail breakneck expansion last year. At the same time, overseas demand for Chinese goods has weakened as consumers in the United States and Europe remain worried about job prospects in their home countries.
This has slowed expansion to the weakest level in 11 quarters, the gross domestic product data showed.
However, the rate of expansion from the fourth quarter of last year was healthier than expected: quarter-on-quarter growth which many analysts focus on because it gives a clearer sense of the economy’s recent performance than the year-on-year comparison came in at 1.8 percent, topping expectations for an increase of 1.6 percent.
At the same time, a flurry of statistics for March has looked more positive. Many analysts say that, with the government again tapping the gas pedal, the economy will avoid an all-out crash.
“Green shoots have sprung up in many sectors, convincing us that the current slowdown looks more and more like a slow consolidation rather than a precipitous downturn like we saw in 2008-09,” Xianfang Ren, a China analyst at IHS Global Insight in Beijing, wrote in a research note.
Retail sales data for March, also released Friday, showed a gain of 15.2 percent compared to March 2011, while industrial activity rose 11.9 percent. Both figures marked slight accelerations from February, and both modestly topped analysts’ forecasts.
Earlier in the week, trade data showed that import growth remaining muted but exports regaining some strength.
And Thursday, the central bank announced that Chinese banks issued just over 1 trillion renminbi ($160 billion) in loans in March, well above what analysts had expected.
The lending surge “is a strong piece of evidence that the People’s Bank of China is quietly but unequivocally relaxing credit quotas behind the scene,” Yao Wei, an economist at Societe Generale in Hong Kong, wrote in a research note.