SHANGHAI — Chinese economic growth slowed unexpectedly in the first quarter of the year.
The country's gross domestic product grew 7.7 percent in the first quarter of 2013, compared with the 7.9 percent expansion seen in the fourth quarter of last year, according to data released Monday by the country's statistics bureau.
Other sectors in the world's second largest economy also experienced a slowdown for the first three months of the year. Retail sales decelerated to 12.4 percent year-on-year from the 14.8 percent growth registered a year ago.
The statistics bureau said slower growth in the retail sector was due largely in part to a decline in business in the catering sector, which has been hit hard by government efforts to crackdown on extravagant banquets organized by officials.
Meanwhile first-quarter industrial output growth narrowed to 9.5 percent in the first quarter of 2013 from 11.6 percent a year ago.
During the National People's Congress in March, Chinese leaders set a GDP growth target this year of 7.5 percent, marking the second consecutive year that the government has slashed economic growth below the 8 percent mark in an effort to bring more stable growth to the economy. GDP growth for 2012 was 7.8 percent.
The World Bank projects China's economy will grow by 8.3 percent in 2013.
The first quarter deceleration can be attributed to weak global demand for Chinese exports, particularly in Europe and North America where economies continue to slump, as well as a policy vacuum during China’s leadership transition, which began in November of last year and wrapped up last month in Beijing. New policies announced in recent weeks aimed at cooling real estate prices and reigning in extravagant government spending have also had an impact, HSBC economist Qu Hongbin said in a research note.
In March, Beijing said it would make it more difficult for homeowners to buy a second home while requiring those who sell their homes to pay a 20 percent capital gains tax on their profit. China’s property market expanded with sales up 61.3 percent year-on-year for the first quarter of 2013.
The less than robust economic data for the first three months of this year “confirm that the economic recovery is fragile,” Hongbin said.
The first quarter GDP growth is “disappointing,” Hongbin said. “As inflation is easing, this should prompt stronger policy response mainly in the format of more fiscal spending in coming months, especially as all the dust of power hand-over is now settled. Once fiscal spending is delivered, growth should be lifted in the coming quarters. But the magnitude of the growth acceleration will depend on the dose of policy response.”
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