China’s economy, battered by collapsing exports, grew at the slowest pace in almost 10 years, probably marking its low point.
Gross domestic product expanded 6.1 percent in the first quarter from a year earlier, after a 6.8 percent gain in the previous three months, the statistics bureau said in Beijing.
A 30 percent surge in urban fixed-asset investment in March and a jump in industrial output, both reported today, added to evidence that the government’s 4 trillion yuan ($585 billion) stimulus plan is working. Premier Wen Jiabao cautioned that while the world’s third-biggest economy is in better-than- expected shape, China is yet to establish a solid foundation for a recovery.
“They’ve stabilized the economy and now the challenge is to think about how to support consumption and how to support private investment,” said Stephen Green, head of China research at Standard Chartered Plc in Shanghai. “We’re still looking for stimulus measures to encourage consumption.”
Today’s report follows a statement from U.S. Treasury Secretary Timothy Geithner that China isn’t a currency manipulator. His stance eases pressure on China to allow its currency to rise, which would hurt efforts to revive exports.
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The yuan traded at 6.8326 against the dollar as of 5:29 p.m. in Shanghai, from 6.8313 before the announcement. The Shanghai Composite Index closed 0.1 percent lower, trimming a 39 percent gain this year, the second-best performance among 88 indexes tracked by Bloomberg.
While stimulus measures have started to produce results, China faces faltering export demand, industrial overcapacity, unemployment and weak private investment sentiment, Wen said in a statement after a meeting of China’s cabinet. A rebound in industrial-output growth lacks momentum, the premier said.