China said yesterday its robust economy slowed slightly in the first quarter of this year, but inflation hit a 32-month high, suggesting Beijing’s efforts to rein in soaring costs are still falling short.
China’s GDP expanded 9.7 percent on year in the first three months of the year, the National Bureau of Statistics said, fueling market expectations for more tightening measures.
The figure beat Dow Jones Newswires’ estimate of 9.5 percent and was lower than the 9.8 percent growth rate posted in the final quarter of last year.
Photo: AFP
“The national economy maintained steady and fast development and had a very good beginning [to the year],” bureau spokesman Sheng Laiyun (盛來運) said.
The consumer price index rose 5.4 percent year-on-year last month — the fastest pace since July 2008 and well above the government’s target of 4 percent for this year — and 5 percent in the first quarter.
Keeping inflation at 5 percent was “no easy job,” said Sheng, as food prices surged 11 percent in the first quarter and housing costs rose 6.5 percent. Inflation hit 4.9 percent in February.
Sheng said China “must persist in managing inflation expectations,” but noted prices fell 0.2 percent last month from February, which was a “good sign.”
However, analysts said the government had more work to do, with further interest rate hikes and tighter bank lending restrictions likely in the coming months.
“The Chinese economy is not slowing as planned or desired. Inflation remains stubbornly high,” said Alistair Thornton, an analyst at IHS Global Insight.
Lu Ting (陸挺), an economist at Bank of America-Merrill Lynch, said prices normally fell more than 0.2 percent following the Lunar New Year holiday.
“That’s why policymakers are a bit nervous about inflation pressures and they raised [the] tone on inflation fighting this week,” Lu said.
Chinese Premier Wen Jiabao (溫家寶) vowed last weekend to ramp up efforts against rising costs, and an industry association on Wednesday ordered businesses not to raise prices and heed Beijing’s call to stabilize costs to help tame inflation.
Prices have remained high despite four interest rate hikes since October last year and numerous increases in the bank reserve requirement ratio, which effectively limits the amount of money banks can lend.
The cost of products at the factory gate also rose 7.3 percent year-on-year last month, up from 7.2 percent in February, the NBS said, as global commodity prices soar following the disasters in Japan and conflict in Libya.
Sheng said investment in real estate development soared 34.1 percent on year to 884.6 billion yuan (US$135.4 billion) in the first quarter. Other data released on Thursday showed a bigger than expected rise in new loans last month.
Industrial output from China’s millions of factories and workshops rose 14.4 percent year-on-year in the first quarter, while fixed asset investment, a measure of government spending on infrastructure, rose 25 percent. Retail sales in the first three months of the year were up 16.3 percent.
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