Newspaper article International Herald Tribune

Chinese Economy Pulled Back at End of 2011 but Factory Output Robust

Newspaper article International Herald Tribune

Chinese Economy Pulled Back at End of 2011 but Factory Output Robust

Article excerpt

Fourth-quarter growth in gross domestic product was the slowest since the second quarter of 2009, but industrial output increased.

The Chinese economy slowed further in the fourth quarter of 2011, the government reported Tuesday, lowering growth in gross domestic product for the year to 9.2 percent, from 10.4 percent in 2010.

G.D.P. grew at an annual rate of 8.9 percent in the final three months of the year, down from 9.1 percent in the third quarter of 2011. It was the slowest pace since the second quarter of 2009, when the rate was 7.9 percent.

Economists had forecast that growth could fall as low as 8.5 percent for the quarter as a slowing global economy dampened demand for Chinese products and as the government's inflation-fighting measures clamped down on domestic expansion.

Industrial production increased 12.8 percent in December from a year earlier, the National Bureau of Statistics said. A Bloomberg survey of economists had predicted a 12.3 percent increase, which would have been the smallest in more than two years.

"It all looks pretty robust, I have to say," said Arthur Kroeber, the managing director of Dragonomics, an analytics firm in Beijing. "Export growth has been slowing, and we'll expect that to continue because Europe is just dreadful, and that's China's best export market. But even with those kinds of negative factors in the mix, the basic structure of the economy is still O.K."

"Things are slowing," he added. "But they're not falling off a cliff."

That said, he and most other analysts said they expected a sharper deceleration in 2012, in part because of the bleak outlook for exports and the scant indication so far that Chinese leaders had been making a serious effort to shift their economy from its export base to one driven by domestic consumption.

Improving domestic demand is crucial to stable economic growth, Jing Ulrich, the chairman of China global markets at JPMorgan Chase, wrote in a report issued Tuesday.

"The government appears more inclined to support the economy by boosting wages and enacting tax reductions," the report said. …

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