China’s economy grew at its slowest pace in six years in the first quarter, highlighting the challenge of finding new growth drivers amid a slowdown in the key pillars of construction and manufacturing.
Gross domestic product grew 7.0 per cent in the first three months of 2015 compared with the same period a year earlier, the stats bureau said on Wednesday, marking the weakest quarterly expansion since the depths of the global financial crisis in the first quarter of 2009.
China’s economy grew 7.3 per cent in the fourth quarter last year
A slowdown in China is widely seen as necessary and inevitable as the country tries to retool its growth model away from smokestack industries and towards domestic consumption and services. Last month Premier Li Keqiang announced a growth target of “around 7 per cent” for 2014.
But policy makers want to avoid an abrupt slowdown that could cause unemployment to spike and threaten financial stability with a wave of defaults.
Expectations that the central bank will respond to weakening growth with further monetary easing has propelled China’s equity market in recent months.
The People’s Bank of China has cut interest rates twice since November in an effort to stimulate investment by lowering borrowing costs. But analysts say companies remain loath to invest even at lower rates, given weakness in final demand and highly indebted corporate balance sheets, especially among state-owned firms.
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