China’s economy grew at an annual rate of 7.0% in the first three months of 2015, its slowest rate in six years

This article is more than 5 years old

This article is more than 5 years old

China’s economy grew at its slowest rate in six years in the first three months of this year, reinforcing bets that policymakers will be forced to introduce more stimulus measures.

Economic output grew 7% in the first quarter on an annual basis compared with a year ago, confirming expectations of slowing expansion. In the last quarter of 2014, the economy grew 7.3%.

On a quarterly basis, economic growth slowed to 1.3% between January and March after seasonal adjustments, the National Bureau of Statistics of China said on Wednesday, compared with growth of 1.5% in the previous three months. Analysts had expected quarterly growth of 1.4%.

Activity indicators, which are regarded as a more accurate picture of the economy, were all weaker in March than expected. Factory output climbed 5.6% in March from a year ago, below forecasts for a 6.9% gain.

Most tellingly, China’s power usage declined 3.7% compared with the previous year, the biggest drop since late 2008, when China’s economy was hit by the global financial crisis.

Yang Zhao of Nomura said: “The weaker Q1 GDP growth and much weaker than expected March activity data suggest that growth momentum remains weak, which calls for further policy easing.

Zhou Hao, economist at ANZ Bank in Shanghai, said the fall in power output was a sign that Beijing’s attempts to reorganise the economy were having an impact.

“Beijing’s decision to remove overcapacity from some industrial sectors has shown some effects on power output, but more importantly, electricity demand was capped by sluggish demand,” said

Fixed-asset investment, a vital driver of the economy, rose 13.5% compared with the same month last year. Investment in property eased to 8.5% as developers made clearing inventory their priority amid a housing glut.

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Retail sales expanded 10.2% compared with expectations for a 10.9% gain.

Figures earlier in the week showed unexpectedly weak trade data with imports and exports both plunging.

The disappointing data supported analysts’ predictions that China’s economic growth would slide to 7% this year, the lowest in a quarter of a century. The figure is still very high compared with developed countries but China’s leaders have set 7% as a minimum target if it is to create enough jobs for the population.