By Patrick Zuo (AFP) – Jan 17, 2012
BEIJING — China said on Tuesday its economy expanded by 9.2 percent last year, slowing from 2010, as global turbulence and efforts to tame high inflation put the brakes on growth.
But the still healthy annual growth suggested that the world's number two economy would avoid a much-feared hard landing despite slumping demand from key export markets in the United States and Europe, analysts said.
The figures, down from 10.4 percent growth in 2010 but well above the government 2011 target of 8.0 percent, also suggest the central bank will be less likely to ease credit in the short-term.
"This indicates our economy is still good and quite stable, and a soft landing for the economy is more possible. Therefore, the government is likely to postpone the next policy easing move," said Li Huiyong, economist at Shenyin Wanguo Securities in Shanghai.
China's gross domestic product (GDP) grew 8.9 percent in the fourth quarter, the National Bureau of Statistics said, slower than in the third quarter, but still exceeding analyst expectations.
"It's slowing, even though it's not particularly aggressive. The economy seems to be surprisingly resilient so far," said Stephen Green, regional head of research for Greater China at Standard Chartered Bank in Hong Kong.
Output from the country's millions of factories and workshops rose 13.9 percent for all of 2011, a slower pace than in 2010, as manufacturers faced reduced demand from key export markets.
Urban fixed asset investment -- a measure of government spending on infrastructure -- rose at a slightly slower pace of 23.8 percent last year as Beijing retreated from stimulus measures.
And retail sales, a key indicator of consumer spending, rose 17.1 percent in 2011, slightly slower than in 2010, despite government moves to boost domestic consumption and make it play a greater role in economic growth.
Statistics bureau chief Ma Jiantang warned that China could face a tough year ahead in light of Europe's sovereign debt crisis.
"We must say that 2012 will be a year of complexity and challenges," he told a news conference.
"Given the turbulence in international financial markets and more serious protectionism in various forms, we're going to face serious challenges."
He played down worries over debt-burdened local governments and a collapse in the property market as the government seeks to bring down home prices.
Local governments, which are banned from borrowing directly from banks, have set up financing vehicles to fund infrastructure and other projects but growing debts have fuelled concerns about a potential explosion in bad loans.
China introduced a range of measures aimed at bringing down property prices last year, such as bans on buying second homes in some cities, hiking minimum down-payments and introducing property taxes.
"We believe that as long as we work hard we will be able to maintain steady and fairly fast economic growth in 2012," Ma said.
Most economists are predicting GDP growth of 8.0-8.5 percent for 2012. China will unveil its economic growth target at the annual session of the legislature in March.
"The slowdown that's been under way for some time continues to be the trend, but it's a slowdown to a rate that's still pretty healthy... and a rate which the Chinese government seems comfortable with," said Andy Rothman, China macro-strategist for brokerage CLSA.
Year-on-year growth in China has slowed for four straight quarters as Beijing -- anxious about soaring costs -- restricted lending and hiked interest rates, while US and European demand for Chinese-made products also weakened.
Nonetheless the fourth-quarter GDP growth beat a forecast of 8.6 percent by analysts polled by Dow Jones Newswires.
The news lifted China's stock market, with the benchmark Shanghai index closing up more than 4.0 percent on Tuesday.
In a bid to boost growth and counter the slowdown in export demand, authorities in December cut the amount of money banks must hold in reserve for the first time in three years.
Some had expected the government to move again to loosen credit as early as this month, but stronger-than-expected growth in the fourth quarter could give policy-makers breathing room, analysts said.
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