China's first quarter GDP at 10-year low

China's gross domestic product (GDP) slowed to 6.5745 trillion yuan ($939 billion) in the first quarter, the National Bureau of Statistics has announced.

The world's third-biggest economy grew by 6.1 per cent year-on-year in the first quarter of 2009, the slowest in the past 10 years, still better than those of other major economies.

Growth in the last quarter of 2008 was 6.8 per cent but dropped in the first quarter of 2009 as exports declined 25.7 per cent in February, improving to a lower decline of 17 per cent in March. China's exports to its key markets - the US and Europe are reeling under recession, with consumers and companies having reigned in their spending. (See: China's exports decline again in February; investments soar)

The GDP reflects that almost all sectors of the Chinese economy appear to have bottomed out since the export shock and construction slump of late last year.

The Chinese government is projecting an annual growth of 8 per cent in 2009 and expects to achieve it by focusing on expanding its domestic demand.

Most of the new activity appears to flow directly from the government's all-out fiscal and monetary stimulus package of 4 trillion yuan ($586 billion) in an effort to counter the impact of the global slowdown, (See: China pumps $586 billion to bolster economy)

The National Bureau of Statistics (NBS) said that exports had dropped sharply, eating into profits of companies' thereby reducing government revenues and increasing job losses.

The NBS was also of the opinion that the national economy will be faced with the pressure of a slowdown.

"The overall national economy showed positive changes, with better performance than expected," the NBS said in a statement distributed before the news conference.

China's industrial output grew 5.1 per cent in the first quarter, up 8.3 per cent year-on-year in March, against 3.8 per cent in January and February.

China's consumer price index, a main parameter of inflation, fell 1.2 per cent year on year in March, with the previous month recording the country's first monthly fall since December 2002, when it declined 1.6 per cent in February. (See: China's CPI enters negative zone signalling deflation)

China's producer price index (PPI) fell 4.6 per cent in the first quarter year on year.

Retail sales grew strongly at 15 per cent to 2.94 trillion yuan ($430.4 billion) in the first quarter.

Fixed asset investment such as new factories and equipment was up 28.6 per cent in March from 26.5 per cent in February.

Spending on property development grew by 4.1 per cent in the first quarter.

Actually used foreign direct investment was $21.8 billion, which is $5.6 billion lower than the same period last year.

NBS said that urban per-capita incomes grew by 11.2 per cent from a year earlier and rural per-capita incomes grew by 8.6 per cent.

China's bank credit also grew in the first quarter. The narrow measure of money supply, M1 (cash in circulation plus corporate current deposits) stood at 17.7 trillion yuan, up 17 per cent year on year.

The country's foreign exchange reserves stood at $1.9537 trillion, up 16 per cent year-on-year at the end of March.

China had recorded double-digit growth from 2003 to 2007 and 9 per cent growth in 2008.

Analysts are of the view that the drop in growth in the first-quarter was in line with expectations. However, other government data indicate a tentative recovery has already begun.

Other positive factor for China's economy is the record import of iron ore and copper in March, which augurs well for countries that supply metals and commodities. (See: Surge in Chinese metals demand not a sign of revival: experts)

China's auto sector remained strong and surpassed the volume of vehicles bought by Americans.

Any indication of the US, Europe and other economies stabilizing could see Chinese exports picking up, giving the necessary thrust to its economy.

US treasury secretary Timothy Geithner yesterday declined to name China as a currency manipulator, in contrast to the government's stance in January, reducing pressure on the Chinese government to allow its currency to rise, affecting export revival. (See: China sees economy recovering; makes multiple protective forex plans)

The new data released shows that the results of March are better than that of February indicating that the policies adopted by the Chinese government is beginning to work and has somewhat made up for declining exports. Hence, the government is optimistic of projecting an 8 per cent growth.

The world bank too projects China's economy to recover fast but adds that the only stumbling block is China's still-heavy reliance on exports to world markets that continue to contract.(See: China's economic stimulus to help pull Asia-Pacific out of gloom by 2010: World Bank)