BEIJING — In the final quarter of 2011, China’s economy grew at its slowest pace in 2 1/2 years because of shrinking exports, tighter bank lending and a cooling real estate market.
(GRAPHIC: Charts showing trend in China’s GDP growth for the past 12 quarters and the past two years.)
Compared with the same period a year earlier, the country’s gross domestic product grew by 8.9 percent in the fourth quarter of 2011, down from 9.1 percent in the previous quarter, China’s National Bureau of Statistics said Tuesday.
For the year, the world’s second-largest economy expanded by 9.2 percent, off from 10.4 percent in 2010.
Though blazingly high by international standards, China’s economic growth is likely slipping uncomfortably fast for the country’s leadership.
Quarter-on-quarter growth slowed to 8.2 percent between the third and fourth quarters compared with 9.5 percent between the second and third quarters.
Many analysts expect conditions to worsen as Europe, China’s biggest export market, shows no signs of stabilizing. Consensus is growing that China’s growth could falter further, to around 7.5 percent, in the first quarter of this year.
That would mark a significant decline because China’s communist government has traditionally eyed 8 percent as the rate necessary to maintain social stability.
Fears of widespread unrest abounded after China’s economic growth slumped to 6.8 percent during the depths of the 2008 financial crisis and an estimated 20 million migrant workers were out of jobs.
Beijing responded to that crisis by introducing an unprecedentedly large stimulus package that ultimately fueled the property bubble and high rates of inflation that bind policymakers today.
Inflation grew at a 15-month low in December, but still remains above the government’s target.
With little room for more aggressive stimulus, the central government will likely target policy with greater efficiency to blunt the effects of any serious global economic slump, experts say.
That may include lowering taxes, boosting loans to the private sector and investing more in social services such as health care — in short, anything to wean China off investment as a major engine of growth and to rebalance toward consumption.
“At this juncture, the challenge for policymakers is to implement measures that boost domestic demand without setting back progress made in curbing inflation,” said Jing Ulrich, chairman of Global Markets for JPMorgan.
Such reform will require an acceptance of slower growth in a country that still considers itself in the early stages of development. At $7.4 trillion, China’s economy is still half the size of the United States’.