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Chinese economy cooling down

April 13, 2012

China's economy expanded by over 8 percent in the first quarter of the current year, a growth rate that Europe and the US can only dream of. And yet, it marked the slowest pace in nearly three years, despite reforms.

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Trucks carrying off coal in Yangzhou, China
Image: picture-alliance/Photoshot

China's economy grew by 8.1 percent in the first quarter of this year, the statistics office announced on Friday. The figure is well below the 8.9-percent growth recorded in the last quarter of 2011 and marked the fifth consecutive quarterly slowdown.

Data from the National Bureau of Statistics (NBS) also showed that industrial output of China's export-driven economy rose at a much slower pace in the first three months of this year. Although production was up 11.6 percent, it failed to reach levels reached in the same quarter of last year when industrial output was put at 15.7 percent.

But analysts are reluctant to see a hard landing coming up for China. "Green shots have sprung up in many sectors, convincing us that the current slowdown looks more like a slow consolidation than a precipitous downturn like we saw in 2008-09," said Xianfang Ren, an economist with HIS Global Insight.

Schuldenkrise bremst Chinas Wachstum # gdp18e # 13.04.2012 21 Uhr # Journal (englisch)

Nevertheless, there's now enormous pressure on China as the manufacturing sector is still hit by falling demand from crisis-stricken Europe, its main export market.

Counter-measures

The Chinese leadership in March revised its growth forecast for this year down to 7.5 percent because of the ongoing uncertainties on global markets. It would be the lowest rate for the world's second-largest economy since 1990.

The government in Beijing has already introduced a string of measures to help its struggling small businesses and is expected to do more to help the export sector. The central bank in February cut the amount of cash lenders must hold in reserve for the second time in three months in a bid to make more loans available and boost domestic consumption.

"While the global environment remains shaky, China is making strides to fuel consumption and curb economic risks," World Bank economist Ardo Hansson told DPA news agency.

And future economic growth remains pivotal for a country with so many people entering the domestic labor market every year. If it doesn't create enough new jobs, social unrest cannot be kept at bay.

hg/gb (AFP, Reuters, dpa)