China economy grows 7.8% in 2012, a 13-yr low

BEIJING, China (2nd UPDATE) – The world’s second biggest economy expanded 7.8% in 2012 — China’s worst performance in 13 years — amid weakness at home and in key overseas markets.

But gross domestic product (GDP) grew 7.9% in the final 3 months of the year, the National Bureau of Statistics (NBS) said on Friday, January 18, as it snapped 7 straight quarters of slowing growth.

China’s GDP reached 51.9 trillion yuan ($8.28 trillion) in 2012, cementing its position as the world’s second-largest economy after the United States.

Annual growth slowed for a second straight year but the figures were just ahead of expectations, with economists surveyed by AFP having projected GDP growth of 7.7% in 2012 and 7.8% in the fourth quarter.

The official statistics come as optimism grows among analysts that the economy will pick up steam in 2013 after two years of relative weakness. The AFP survey showed expectations of an acceleration to 8% growth this year.

In a statement the NBS said China’s overall economic performance was “getting stabilized”.

“In the next phase we should… focus on changing the economic growth mode as the main theme and improving the quality and efficiency of economic growth at the core,” it said.

China’s growth has slowed as the government took steps to cool a once red hot property market and amid weakness in the global economy, particularly the key export markets of the United States and Europe.

Zhang Zhiwei, China economist for Nomura International in Hong Kong, told AFP: “The data showed that the recovery is on track, but in the meantime inflation is picking up.

“So monetary policy will likely be tightened this year, with no chances of cuts in banks’ reserve requirements or interest rates. As a result, GDP growth may slow down in the second half of this year.”

The annual growth figure was the lowest since 1999, when it stood at 7.6%, according to official statistics.

Growth had slowed for 7 straight quarters through September, when the economy expanded 7.4%, the worst since early 2009. Annual GDP grew 9.3% in 2011 and 10.4% in 2010.

The statistics bureau also released other key indicators Friday.

Industrial production grew 10% in 2012 and 10.3% in December year-on-year. Retail sales, China’s main gauge of consumer spending, increased 14.3% in 2012 and 15.2% in December.

Also, fixed-asset investment, a key measure of government spending on infrastructure, expanded 20.6% to 36.5 trillion yuan in 2012 — accounting for just over 70% of the economy. – Agence France-Presse