The Chinese economy expanded its slowest in 1 ½ years in the January-March quarter, reported the National Bureau of Statistics on Wednesday.
So far, Beijing has refused to announce a major stimulus to prop up the economy, instead opting for smaller raft of measures such as tax cuts for small businesses and hastening the pace of railway construction in order to boost growth.
The economy gained 7.4 percent in the first quarter ended March from a year ago; which though it exceeded the average estimate of a 7.3 percent growth in a Reuters survey, was slower than the 7.7 percent growth posted in the preceding quarter. This was the most sluggish pace of growth since the July-September quarter of 2012, which was also 7.4 percent.
The report divided economists, with some factions forecasting that economic growth has steadied, while others say the government will loosen its policy anytime soon.
“Policymakers seem pretty comfortable with the current pace of growth,” Julian Evans-Pritchard, a Singapore-based economist at Capital Economics told Reuters. “I don’t think they’re going to announce any further significant measures to support growth.”
Beijing, which is currently shifting its economy from an investment-driven to a consumer-led one, is targeting a growth rate of 7.5 percent in 2014.
Factory activity rose 8.8 percent from a year earlier, which lagged forecasts of a 9 percent growth. Investment in fixed assets grew 17.6 percent in the three months ended March, which was also less than estimates of 18.1 percent expansion. However, retail sales grew 12.2 percent against estimates of a growth of 12.1 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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