China’s economy is still slowing down, hitting its lowest growth rate in almost three years, with the first-quarter rate prompting fears that additional government intervention might be necessary to halt its downward slide.
Reuters reported Friday on data from the National Bureau of Statistics, which indicated that the annual rate of growth for China’s GDP had fallen in the first quarter to 8.1% from 8.9% in the previous quarter. Economists had expected a rate of 8.3%.
Other data released Friday showed an expansion of industrial output for March of 11.9%, an increase of retail sales for the month of 15.2%, and a boost of 20.9% in quarterly fixed-asset investment.
However, residential real estate investment in March dropped to an annual growth level not seen since the mid-2009. At that time China’s policymakers were launching a stimulus package of 4 trillion yuan ($635 billion) to jumpstart growth after the global financial crisis had caused it to grind nearly to a halt.
The real estate sector not only made up about 13% of China’s GDP in 2011, but has a direct effect on more than 40 industries. Beijing has worked for two years to halt property speculation, and the effects of its actions have thus been pervasive throughout the nation’s economy.
“What’s clear is that the economy is still decelerating and the property sector clearly is deflating,” Yao Wei, China economist at Societe Generale in Hong Kong, was quoted saying. “Looking at the property data, it seems that property investment has finally started to correct. I think this trend will continue and will drag growth even lower in coming months so we don’t think this is the bottom yet. It means more monetary easing will be needed to prevent a sharper deceleration.”