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of property bubbles have hidered growth
(Source: bbc.co.uk) |
China's economy, the world's second-largest, grew at its slowest pace in more than two years, latest government figures show. China has previously been one of the fastest-growing economies in recent years.Gross domestic product expanded by 8.9% in the three months to the end of December, from a year earlier. That is down from 9.1% in the previous quarter. Analysts said they expect the economy to slow further this year.
"Looking at the rest of 2012, you are going to see an even sharper slowdown in the first quarter because of the effect of monetary tightening," said Arjuna Mahendran, chief Asia strategist at HSBC Private Bank.
Stimulus measures implemented by the government have created the risk of asset bubbles developing and China is looking at ways of gently slowing growth to what it sees as more sustainable levels.
These measures have included a curb on lending to prevent overheating in the property and investment markets, and tightened monetary supply.
However, it is not just domestic factors influencing growth. Another reason for the slide is the slowdown in exports because of weakening demand from Europe and the US.
Some analysts are now calling for China to alter its growth strategy towards more sustainable levels, even if it is slower.
"If you look at the composition of the growth, it is overwhelmingly delivered by an investment boom," said Patrick Chovanec, associate professor at Tsinghua University's School of Economics and Management in Beijing.
"They have to focus on a sustainable development path, away from investment and more focused on domestic markets here in China".
Chinese authorities have been trying to boost levels of domestic consumption to reduce the country's reliance on exports./.