China's economy slowed further as it dipped to 7 per cent in the first quarter, the worst slump since the 2009 global financial crisis, raising concerns over the second largest economy's deceleration and putting pressure on the government to take more steps to maintain growth.
While China managed to meet the annual growth target of 7 per cent set by its Central Government for 2015, the growth however declined from the previous quarter's 7.3 per cent. last year, China's GDP had registered a growth of 7.4 per cent, a 24 year-low.
The continuing slowdown of the economy has become a major concern for policymakers as forecasts say the world's second largest economy will continue to decelerate till next year. A recent IMF forecast said China's growth would further dip to 6.8 this year and 6.3 next year, falling just behind India's 6.5 per cent.
“The Chinese economy is generally holding steady in the first quarter because employment, consumer prices and market expectations are basically stable, despite a slowdown in economic growth,” said National Bureau of Statistics (NBS) spokesperson Sheng laiyun. Sheng said the slump was expected as the government had predicted tough challenges and continued downward pressure on the economy this year. Sheng attributed the slowdown to sluggish global economic recovery in the post-crisis period and the ongoing structural reforms at home.
The first-quarter gross domestic product (GDP) totalled 14.07 trillion yuan ($ 2.29 trillion), up 7 per cent year-on-year, according to the NBS data. The central People's Bank of China this year cut benchmark interest rates for the second time in three months this year, loosened bank reserve requirement ratios to spur lending and took steps to boost the slumping property market. But analysts believe authorities would likely take further steps to boost growth and create jobs.
The data also indicated a robust industrial output growth of 7.9 per cent in the tertiary industry during the period. Industrial output in general grew at 6.4 per cent year-on- year, down from 8.7-per cent last year; fixed asset investment rose 13.5 per cent from a year earlier to 7.75 trillion yuan, slowing further from the 13.9-per cent growth registered in the January-February period this year; retail sales gained 10.6 per cent year-on-year to 7.07 trillion yuan.
Sheng said despite slower industrial output and investment growth, China has steadily pushed structural reforms that led to a better industrial layout and rise in people's income. According to the NBS data, the tertiary industry accounted for 51.6 per cent of the total GDP in the first quarter, up 1.8 percentage points compared to the same period last year.
Its share of the GDP also exceeded that of the secondary industry by 8.7 percentage points. The average per capita disposable income of Chinese households rose 9.4 per cent year-on-year to 6,087 yuan. The consumer price index, a main gauge of inflation, was registered at 1.2 per cent in the first quarter.