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Sunday
Mar102013

China’s Economy Has Underwhelming Start, Slowest Since 2009

Getty/George Doyle/Thinkstock(BEIJING, China) -- The growth of China’s economy may be showing signs of slowing down, as the nation’s industrial output started the year weaker than it has any year since 2009 and lending and retail growth slowed, though the economy is still growing on the whole.

Bloomberg is reporting that government economic data released on March 9 shows growth that falls short of economists’ estimates, who were underwhelmed by the 9.9 percent production increase in January-February and the 12.3 percent retail sales growth.

Economists had predicted a 10.6 increase in production, and a 13.8 percent increase in retail sales. Retail sales have not increased by so little since 2004, and the lack of retail sales may partially be a result of a crackdown by Communist Party chief Xi Jinping on lavish spending by government officials and state-owned companies.

The government should also be mindful of rising inflation in China, which rose by four percent this year, a half-percent over the government’s target.

“From a monetary policy perspective, by mid-2013, the inflation issue should begin to move up policy makers’ list of things to worry about,” Li Wei, a Shanghai-based economist with Standard Chartered, said in a note.

There is some good news for the Chinese, as exports jumped 23.6 percent, the most they have in the first two months of the year since 2010.

The slower than expected growth isn’t dire news, but it does merit some concern.

“Policy makers face a dilemma as growth is weakening yet inflationary pressure keeps building,” Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong told Bloomberg.

“The government will eventually have to tighten policy to contain inflation but in the short term, the next several months, the government may put policy on hold to observe how growth and inflation move and fine-tune accordingly.”

Copyright 2013 ABC News Radio