China’s Economy Grows Only 6.1% in Q1

China’s economy, battered by collapsing exports, grew at the slowest pace in almost 10 years, probably marking its low point., Bloomberg 4/20/2009 7:49:49 AM

Gross domestic product expanded 6.1 percent in the first quarter from a year earlier, after a 6.8 percent gain in the previous three months, the statistics bureau said in Beijing.

A 30 percent surge in urban fixed-asset investment in March and a jump in industrial output, both reported today, added to evidence that the government’s 4 trillion yuan ($585 billion) stimulus plan is working. Premier Wen Jiabao cautioned that while the world’s third-biggest economy is in better-than- expected shape, China is yet to establish a solid foundation for a recovery.

While stimulus measures have started to produce results, China faces faltering export demand, industrial overcapacity, unemployment and weak private investment sentiment, Wen said in a statement after a meeting of China’s cabinet. A rebound in industrial-output growth lacks momentum, the premier said.

He pledged that the government would continuously improve” stimulus measures, prepare more contingency plans for the economy, add measures to spur private investment, and stick with a moderately loose” monetary policy.

Industrial production expanded 8.3 percent in March from a year earlier, up from 3.8 percent in the first two months, the statistics bureau said today. Retail sales rose 14.7 percent.

Consumer prices fell 1.2 percent in March from a year earlier, compared with a drop of 1.6 percent in February. Producer prices fell 6 percent, the most since Bloomberg data began in 1999.

Growth has slowed from 9 percent for all of 2008 and 13 percent in 2007 and remains below the 8 percent level that the government deems necessary to create enough jobs.

China’s Economy Grows Only 6.1% in Q1