China’s economy expanded by 7.4 per cent in the first quarter of this year, the slowest rate of expansion since the third quarter of 2012, according to the country’s National Bureau of Statistics.
The economic growth rate was higher than expected by some analysts but still significantly lower than the last three months of 2013, when it expanded by 7.7 per cent.
Slowing economic growth in China is among the key concerns of investors globally as the country is one of the key drivers of demand for many industries and othe economies.
According to the Financial Times, analysts now expect China’s economic growth for the whole of 2014 to be its slowest rate since 1990, when China was under international sanctions in the wake of the Tiananmen Square massacre.
The last time China’s economic growth was this slow, in 2013, the government unveiled a stimulus package for its economy, increasing ifnrastructure spending and looseining monetary policy by cutting interest rates.
At the start of this month China’s government introduced a small stimulus package in a bid to reassure investors that growth would not collapse. This included tax breaks for small businesses and an acceleration in infrastructure development.
Gautam Batra, investment strategist at Signia Wealth, said: “A Chinese economy dragging its heels will do little to spur on global growth, with any further slippage likely to continue to weigh on global equities.
“The Chinese government will need to do more than this month’s ‘mini-stimulus’ to alleviate concerns. Their policies to allow bank recapitalisations will add further pressure to the currency, which is already suffering, and result in greater pricing pressure for China’s competitors.”
