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Quarterly growth lowest in 7 years

By Wang Xu (China Daily)
Updated: 2009-01-23 08:10

The country's economic growth in the fourth quarter of 2008 slowed to 6.8 percent year-on-year, the lowest in seven years, the National Bureau of Statistics (NBS) said yesterday.

Special Coverage: Figures and Surveys

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And the GDP growth for the whole of last year dropped to 9 percent, down from 13 percent in 2007, the bureau said.

"The global financial crisis is deepening, and continues to hurt China's economy," NBS chief Ma Jiantang told a press briefing.

The economy has been losing steam because of a slump in the domestic property market and the shrinking of overseas demand, which caused last year's exports growth to fall to 18.5 percent from 26 percent in 2007.

Though fixed assets investment grew 25.5 percent last year, it was only 0.7 percentage point more than in 2007.

Domestic consumption was one of the few bright spots of the economy as retail sales grew 21.6 percent compared with 16.8 percent in 2007.

The consumer price index, a main gauge of inflation, was 5.9 percent in 2008, still high compared with 4.8 percent in 2007. But consumer inflation fell to 1.2 percent in December, thanks to a drop in commodity and food prices.

The producer price index, used to measure wholesale inflation, fell 1.1 percent last month, lending credence to worries over deflation in 2009.

"The economic slowdown was felt most seriously among second and tertiary industries, on which the trade collapse and weakening demand had the greatest impact," said Ken Peng, a Citigroup economist based in Shanghai. Economic growth could sink further in the first quarter of this year, he said.

Despite the slowdown, analysts said December figures offer some hope of a recovery. "While the news from the rest of the world seems to be bad, there is still quite a bit going on here (in China) which is positive," said Stephen Green, Standard Chartered Bank's head of China research. "There are signs of a mild recovery in 2009."

"The country will definitely be able to achieve 8 percent growth this year as long as the central government's policies to boost domestic investment are carried out properly," Ma said.

The government's proactive fiscal policy and moderately relaxed monetary policy are yielding results, the analysts said, because the growth of loans in December jumped 18.8 percent year-on-year and that of money supply picked up after months of decline.

Last month's industrial output rose 5.7 percent year-on-year after plunging to a 10-year low of 5.4 percent a month earlier.