Q4 economic growth, at 8.9%, slowest in 2 years

Updated: 2012-01-17 11:06

(Agencies)

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BEIJING - China's economic growth slowed in the final quarter of 2011 to its lowest rate in two and a half years as the United States and European consumer demand plunged and Beijing fought inflation.

The world's second-largest economy grew by 8.9 percent in the three months ending in December, data showed Tuesday. It was the slowest expansion since the second quarter of 2009, when the economy grew 7.9 percent.

For the full year, the economy grew 9.2 percent, down from 2010's blistering 10.4 percent after authorities tightened lending and investment curbs to prevent overheating and inflation.

Hit by an abrupt plunge in Western consumer demand, regulators reversed course in late 2011 and tried to prop up growth by promising more bank lending to help struggling exporters and avert job losses.

Analysts are expecting further slowdown in the first quarter this year, as Europe is slipping into recession and US growth is highly likely to be lackluster, putting a big dent in overseas demand for Chinese products.

China faces a highly complicated external environment in 2012, said Ma Jiantang, head of the National Bureau of Statistics, citing the sluggish global economy.

The statistician also pointed to a number of domestic risks, including mid- and long-term upward price pressures and funding shortages for small businesses, as well as structural changes intended to enhance energy-saving and emission reduction.

Nevertheless, Ma expressed confidence in the world's second largest economy. "Although GDP growth fell on a quarterly basis, it was within a reasonable range and the country's economic fundamentals were not changed. We have confidence for 2012's growth.".

He said the country's urbanization process, development of its market economy and industrialization have provided exhaustive forces for growth.

In 2011, China's urban population exceeded the number of rural dwellers for the first time, rising to 51.3 percent of the nation's 1.3 billion people, according to the NBS.

China's industrial value-added output growth decelerated in 2011 from a year earlier to 13.9 percent year-on-year. The country's fixed-asset investment, a measure of government spending on infrastructure, rose 23.8 percent year-on-year.

Retail sales, a key indicator of consumer spending, rose 18.1 percent year-on-year in December 2011, up from the 17.3-percent growth seen in November.

"The figures are very impressive amid complicated international and domestic situations," Ma said.

Ma's comments were echoed by Zhang Xiaojing, a researcher with the Chinese Academy of Social Sciences, a government think tank. Zhang said the slowdown was a result of macroeconomic controls and sluggish external demand.

"Since the country's inflation has eased, the government has more room to fine-tune its macroeconomic policies in the future. Authorities could continue to implement structural tax reduction to change the country's economic structure and improve livelihoods," said Zhang.

A December inflation decrease has fueled widespread guesses about possible policy loosening to spur the slowing economy, although analysts believe that significant easing is unlikely, since inflationary pressures still remain.

The full-year inflation figure for 2011 was still up 5.4 percent from the previous year and well above the government's full-year control target of 4 percent.