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Confirming the concerns of investors and economists, the Chinese government announced on Wednesday morning the country's inflation-adjusted economic output in the first quarter was up 7.4 per cent from a year ago - and had risen much less than that, compared with the previous quarter.
Beijing officials have set a growth target for the whole year of about 7.5 per cent; unlike growth targets in previous years, this year's target has not been set as a floor, giving the government some political leeway if the final figure falls slightly short. But for the first quarter by itself, the annualised growth rate compared with that in the fourth quarter appears to have been less than six per cent, economists said.
Sheng Laiyun, a spokesman for the National Bureau of Statistics, said the latest figures nonetheless represented an economy showing considerable strength.
"Despite the economic slowdown, China's economy is still growing at a medium to high speed," he said during a news conference in Beijing.
Weak exports and a plunge in housing starts, down 27.2 per cent from the first quarter of last year, were powerful brakes on growth in the first quarter. A credit squeeze has hurt many developers, as well as smaller exporters that struggle to borrow enough money to finance purchases of raw materials and sales of finished goods.
Troubles in the housing market have also created broad nervousness about the sustainability of high home prices, with small, outlying apartments costing more than an entire decade's salary for a recent college graduate.
But the service sector, which includes industries like hotels and restaurants and which has emerged as a big job creator in recent years, fared better than expected in the first quarter.
Louis Kuijs, a China economist in the Hong Kong office of the Royal Bank of Scotland, said the service sector's resilience and recently announced government initiatives like an acceleration of railroad construction and redevelopment of shantytowns meant it was still possible for economic growth in all of 2014 to meet his forecast of 7.7 per cent.
Industrial production, which is not adjusted for inflation, was up 8.8 per cent in March from a year ago, the government also announced on Wednesday morning. Retail sales climbed 12.2 per cent in March.
Both were weak figures by Chinese standards but suggested some improvement from January and February.
Fixed-asset investment for the first three months of the year was 17.6 percent higher than for the first quarter of last year, the weakest year-to-date figure since November 2001, as the home building sector's troubles offset extensive construction of infrastructure.
Much of the year-on-year growth in the Chinese economy reflected by the 7.4 per cent growth figure released on Wednesday morning was the result of economic expansion that actually took place during the second, third and fourth quarters of last year. Although the United States and many other industrialised countries release annualised economic growth figures for each quarter compared with the previous quarter, China does not provide this statistic, preferring year-on-year figures that show less volatility.
Private economists estimated that the annualized, quarter-on-quarter growth was between 5.2 and 5.7 percent, depending on what seasonal adjustment was used.
Some private economists had expected year-on-year growth to be slightly weaker, at 7.3 per cent. The Shanghai stock market was up 0.33 per cent in the first hour and a half after the figures were released, while the Hong Kong market was up 0.74 per cent.
The year-on-year growth of 7.4 per cent was the slowest since the third quarter of 2012, also 7.4 per cent; the last time year-on-year growth was slower was in the third quarter of 2009, during the global financial crisis, when it was 6.6 per cent.
Even three or four years ago, growth of less than 8 per cent would have alarmed Chinese officials. But the Chinese economy needs somewhat less growth to maintain nearly full employment these days, because the labor force has begun to shrink, Sheng said.
The falling number of Chinese ages 16 to 55 reflects the increasingly strict enforcement of the "one child" policy through the 1990s and has produced surging blue-collar incomes that are helping to sustain growth in the services sector.
©2014 The New York Times News Service
