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Local govts post drop in GDP

By Song Shengxia (Global Times)

08:06, April 25, 2012

Several major developed regions in the country have posted quarterly GDP much lower than the overall GDP figure for the nation, underscoring a need for fine-tuning policies to reverse the fast decline of growth in these regions and avoid a hard landing for the overall economy, economists said yesterday.

More than 21 provinces, autonomous regions and municipalities had posted their first quarter GDP by yesterday, with the majority of them seeing slower GDP growth than in the same period last year.

Only Central China's Henan Province, Southwest China's Guizhou Province and Northwest China's Ningxia Hui Autonomous Region posted year-on-year rises in first quarter GDP growth, with all the other regions reporting a decline in the growth rate of one or two percentage points.

Beijing and Guangdong Province posted GDP growth of 7 percent and 7.2 percent respectively in the first quarter, slower than the nation's 8.1 percent quarterly GDP growth and lower than the growth target of 7.5 percent for this year.

Shenzhen, a southern export hub, reported quarterly GDP growth of just 5.8 percent, the lowest level in decades.

"Costal regions such as Shenzhen, which rely strongly on exports, were affected greatly by weak external demand," Zhuang Jian, a senior economist with the Asian Development Bank, told the Global Times, noting the country's industrial restructuring and the central government's effort to combat inflation through monetary tightening and property control policies also contributed to the decline.

According to Zhuang, the big trend is that eastern regions have been growing more slowly than central and western regions.

"We should be wary of the fast decline of growth in developed regions because they make a major contribution to the country's economic growth," Zhuang said.

"A drastic growth decline in these regions cannot be offset by fast growth in the central and western regions," he said.

However, Zhuang suggested that the country should not cut investment in the short term, especially investment in infrastructure, but he also said aggressive measures like another 4 trillion yuan (about $570 billion) worth of stimulus is unrealistic.

"The economy is now in a downward cycle and will touch the bottom this month or May and rebound in the second quarter. But a drastic decline in the economy should be avoided. There is still room for the central bank to ease monetary policy to aid growth, but not that much room," Yang Li, an analyst with Adfaith Management Consulting, told the Global Times.

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