China’s GDP Grows at Slowest Pace in Almost a Decade

(Bloomberg) -- China’s gross domestic product, battered by collapsing exports, grew at the slowest pace in almost 10 years, probably marking the low point for the world’s third-biggest economy.

GDP expanded 6.1 percent in the first quarter from a year earlier, after a 6.8 percent gain in the previous three months, the statistics bureau said in Beijing today. The figure was below the 6.2 percent median estimate of 13 economists surveyed by Bloomberg News.

Growth in industrial production and investment accelerated, adding to evidence that Premier Wen Jiabao’s 4 trillion yuan ($585 billion) stimulus plan is working. The Shanghai Composite Index fell from an eight-month high amid speculation that Wen will have to do more to increase consumption and wean the economy from a dependence on exports.

“They’ve stabilized the economy and now the challenge is to think about how to support consumption and how to support private investment,” said Stephen Green, head of China research at Standard Chartered Plc in Shanghai. “We’re still looking for stimulus measures to encourage consumption.”

Today’s report follows with a statement from U.S. Treasury Secretary Timothy Geithner that China isn’t a currency manipulator. His stance eases pressure on China to allow its currency to rise, which would hurt efforts to revive exports.

From July 1 to the end of last year, the yuan rose just 0.4 percent against the dollar. Its value has been little changed since the beginning of the year.

Domestic Demand

The currency traded at 6.8313 against the dollar as of 11:34 a.m. in Shanghai, unchanged from before the announcement. Shanghai’s benchmark stock index fell 0.1 percent, trimming its gain this year to 39 percent, the second-best performance among 88 indexes tracked by Bloomberg. It earlier rose as much as 0.5 percent.

“While we are facing difficulty in relying on external demand, we have to turn back to domestic demand, including consumer spending and investment to sustain growth,” said statistics bureau spokesman Li Xiaochao.

Industrial production expanded 8.3 percent in March from a year earlier, up from 3.8 percent in the first two months, and urban fixed-asset investment surged 30.3 percent, the statistics bureau said. Retail sales rose 14.7 percent in March.

Urban disposable incomes rose 11.2 percent excluding inflation and rural cash incomes climbed 8.6 percent.

Read more at Bloomberg