China growth hits seven-year low but slowdown ‘could be bottoming out’

China’s economy grew at its weakest pace in seven years in the first quarter, official figures showed, but there were signs that its slowdown was bottoming out. Gross domestic product expanded by 6.7% in the January-March period, slowing from a rate of 6.8% in the last three months of last year. It represented the weakest pace of growth since the first quarter of 2009 for the world’s second biggest economy, whose stuttering performance has prompted a turbulent few months for global markets. But economists pointed to surprisingly high growth in consumer spending and in investment in industrial assets and infrastructure as signs the slowdown might be over.

China’s growth looks to have bottomed out

Julian Evans-Pritchard, of Capital Economics

The health of the Chinese economy is seen as critical for the rest of the world as so many countries have come to rely on it. The latest figures show it grew by 6.9% in 2015 as a whole, its slowest pace for a quarter of a century. However, the figure was towards the top end of expectations but may have been inflated by a government rescue package. The economy saw “sound development” in the first quarter, National Bureau of Statistics spokesman Sheng Laiyun said, adding that the readings pointed to “positive changes on major indicators”. But he cautioned: “We must be aware that we are in a critical stage of transformation and upgrading as well as replacing old drivers of growth with new ones.”

If anything, the figures are surprisingly high, so one wonders about the sustainability of the growth rate for future months.

Craig James, chief economist at Commsec in Sydney

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