China’s GDP growth slows to 9.5 per cent

(Source: Indian Express/Associated Press Posted online: Thu Jul 14 2011, 01:53 hrs)
Beijing : China’s rapid economic growth slowed in the latest quarter to a still robust 9.5 per cent, easing fears of an abrupt slowdown and giving Beijing room to tighten controls to fight surging inflation.
Growth slowed from 9.7 per cent in the January-March quarter following repeated interest rate hikes and other controls, data showed Wednesday. Factory output rebounded and retail sales grew by double digits.

While the US and Europe try to shore up sluggish growth, Beijing wants to steer its breakneck expansion to a more manageable level and cool inflation that soared to a three-year high of 6.4 per cent in June. “The strength of the economy will make them confident and well prepared to impose more tightening measures if needed,” said Frances Cheung, a senior strategist for Credit Agricole CIB in Hong Kong.

Many analysts had expected second-quarter growth of 9.3 per cent to 9.5 per cent. Asian stock markets, which have wilted in recent days amid Europe’s worsening debt crisis, got a boost from the Chinese economy’s resilience.

The slowdown in the world’s second-largest economy could have global repercussions if it cuts into demand for iron ore, factory machinery and other imports. Data released earlier showed China’s import growth fell sharply in June.

Inflation is politically dangerous for the communist government because it erodes the public’s economic gains and can fuel unrest. Analysts expect inflation to ease later in the year but June’s unexpectedly sharp price rises, driven by a 14.4 per cent jump in food costs, prompted suggestions Beijing might hike rates again or tighten other controls.

“Stabilising prices remains the top priority for our macro-regulatory policies,” Premier Wen Jiabao told a group of businesspeople on Tuesday, according to the official Xinhua News Agency.