Beijing struggles to prop up growth

China's economy grew 6.1 per cent in the first quarter – the lowest year-on-year figure since quarterly gross domestic product data was first published in 1992 – as Beijing struggled to prop up activity in the face of the global crisis.

The increase was down from 10.6 per cent growth in the same period a year earlier and 9 per cent for the whole of 2008 but aggressive government stimulus measures begun in the fourth quarter last year have started to yield signs of recovery.

The figure was “indeed quite an achievement” against the background of the worsening global crisis and recession in many of the developed economies that China relies on to buy its exports, said Li Xiaochao, spokesman for the National Bureau of Statistics.

Industrial production growth accelerated 8.3 per cent in March and 5.1 per cent in the first quarter from a year earlier, according to Mr Li.

But aggregate profits at large Chinese enterprises fell 37.3 per cent in the first two months from a year earlier and industrial use of electricity – which is usually closely correlated to industrial production actually fell 8.38 per cent in the first quarter from a year earlier – according to the China Electricity Council.

Mr Li said he had no explanation for the discrepancy between falling power consumption and rising industrial production but insisted that both figures were accurate and the issue required “further study”.

Rapid cooling in the Chinese economy has been led by a collapse in exports and private sector investment. This has prompted the government to fast-track infrastructure projects and spending programmes, and order state-run banks to open the credit taps to flood the system with liquidity.

Although there is still little evidence of new private sector investment, the government's efforts have led to a rebound in investment figures and show signs of stimulating wider demand in the economy.

Sun Mingchun, an economist at Nomura Securities, said economic data released yesterday “showed that the economy has gained significant momentum since February”.