China’s gross domestic product (GDP) grew at an annual rate of 7 percent in the first three months, matching the median estimate of both government and economists. However, this growth was seen to be the lowest since 2009 first quarter.
After seasonal adjustments, the National Bureau of Statistics of China announced that the economic growth slowed to 1.3 percent between January and March.
Being the key driver of the economy, the fixed asset investment declined to a seasonally adjusted 13.5 percent, being the weakest expansion for the first quarter.
Growing concerns put pressure on Chinese government to develop more policy stimulus despite meeting government target in the first quarter, as sluggish growth can ignite unemployment and debt defaults.
Previous attempts such as reducing monthly bank reserves, relaxing home-buying rules and cutting the interest rates twice have already been taken. In order to prevent further lethargic growth in the second quarter, a development of a new stimulus is expected.
A similar crisis was seen in 2009 when Chinese economy declined to 6.6 percent leaving millions of migrants unemployed. Recovery only came after the pricey implantation of a new stimulus package which left local governments in debt.
In other reports published by the Chinese government, both industrial production and retail sales increased in March as industrial rose to 5.6 percent while retail sales climbed to 10.2 percent.
March’s 15 percent contraction of export sales sent a wave of worry in terms of Chinese economy while import shipments contracted 12.7 percent.
On the other hand, growth in GDP has impacted the markets negatively.
While the Shanghai Composite Index of stocks declined by 1.2 percent, Asian stocks such as Asian Pacific Index MSCI also declined.