Chinese G.D.P. for First Quarter Shows Signs of Slowdown

HONG KONG — The Chinese economic recovery lost some of its momentum during the first quarter of this year, official data released on Monday showed, surprising analysts who had expected growth to accelerate on the back of ample credit, strong infrastructure spending and firm exports.

The economy expanded by just 7.7 percent during the first three months of the year, compared with a year earlier, short of the 8 percent that economists polled by Reuters had projected, and slower than during the previous three months, when gross domestic product rose 7.9 percent year-on-year.

Industrial output data for March also underlined the fading momentum. Growth dropped to 8.9 percent compared with March 2012, well below expectations.

The spokesman for the Chinese statistics bureau, Sheng Laiyun, played down the shortfall.

“Over all in the first quarter the economy had a steady start and has advanced in a stable way,” Mr. Sheng said at a news conference in Beijing. “Generally, it’s operating within the range of 7.4 percent to 7.9 percent — that is, steady growth.”

China’s industrialization and urbanization would remain powerful engines for relatively rapid growth, Mr. Sheng said.

Analysts had widely expected China’s economy, the world’s second biggest after the United States, to have picked up more steam during the first months of the year, as a tide of credit flowed into the economy, and government-mandated investment in infrastructure projects picked up.

In fact, the growing scale of credit has begun to worry an increasing number of analysts, who warn that the resulting buildup of debt bears substantial risks, including asset price bubbles and potentially destabilizing defaults.

Fitch Ratings last week expressed concerns about the long-term consequences for China’s financial stability over the country’s huge buildup in debt, particularly borrowing by local governments.

Article source: http://www.nytimes.com/2013/04/15/business/global/chinese-gdp-for-first-quarter-shows-signs-of-slowdown.html?partner=rss&emc=rss