March 28, 2024

Chinese Economic Growth Slipped Again in 4th Quarter

BEIJING — China’s economy slowed further in the fourth quarter of 2011, the government reported, lowering the growth in gross domestic product for the year to 9.2 percent, from 10.4 percent in 2010.

The gross domestic product grew at an annual rate of 8.9 percent in the last three months of the year, down from 9.1 percent in the third quarter of last year. It was the slowest pace since the second quarter of 2009, when the rate was 7.9 percent.

Economists had forecast that the rate of growth could drop to as little as 8.5 percent for the quarter as a slowing global economy cooled demand for Chinese products and the government’s inflation-fighting measures clamped down on domestic expansion.

Industrial production increased 12.8 percent in December compared with the same period a year earlier, the national Statistics Bureau stated. A Bloomberg survey of economists had predicted a 12.3 percent increase, which would have been the smallest in more than two years.

“It all looks pretty robust, I have to say,” Arthur Kroeber, the managing director of Dragonomics, an analytics firm in Beijing, said by telephone. “Export growth has been slowing and we’ll expect that to continue because Europe is just dreadful, and that’s China’s best export market. But even with those kinds of negative factors in the mix, the basic structure of the economy is still O.K.

“Things are slowing. But they’re not falling off a cliff.”

That said, he and most other analysts said that they expected a sharper deceleration in 2012, in part because of the bleak outlook for exports and the scant indication so far that Chinese leaders are making a serious effort to shift their economy from its export base to one driven by domestic consumption.

Improving domestic demand is crucial to stable economic growth, Jing Ulrich, the chairman of China global markets at JPMorgan Chase, said in a report issued on Tuesday.

“The government appears more inclined to support the economy by boosting wages and enacting tax reductions,” the report said. “There is considerable scope to support domestic demand by boosting income growth, and by reducing the tax burden for both companies and individuals.” 

Mr. Kroeber said his firm believed that annual growth in 2012 could cool to as little as 8 percent.

Chinese regulators have alternated in the last year between pumping up the economy and deflating it. External factors like the European debt crisis kept export demand unpredictable, and domestic influences like China’s red-hot property markets balked at attempts to control them.

The government finally began to cool property prices in the second half of 2011 after sharply curbing lending to prospective homebuyers and forcing banks to set aside more money in reserve. But at year’s end, regulators began to reverse course, lowering bank reserve requirements to stimulate lending after exports began to sag.

Their challenge in the next year is to stimulate the economy enough to maintain stable growth without worsening some of the problems that began to appear when G.D.P. was barreling ahead in 2010 and early 2011, said Alistair Thornton of IHS Global Insight in Beijing.

In particular, he said, encouraging more lending by the state-controlled banking sector — one of the government’s principal economic levers — risks a further buildup of local government debt, which some say is already at worrisome levels, and reigniting inflation, a serious worry in mid-2011.

More lending also could reinflate the property market that many say already was becoming a bubble before the government sharply reduced lending last year.

The figures released Tuesday show that fixed-asset investment in real estate, a key measure of the property market, dropped sharply in December. But even so, investment rose at a torrid 27.9 percent rate for the last 12 months.

Article source: http://feeds.nytimes.com/click.phdo?i=bec1cdbb0737ac9f0fb5cc6743382b6e