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Slowing growth rate 'not unexpected'

By Wei Tian, Hu Yuanyuan and Oswald Chen (China Daily)

13:22, May 15, 2012

Economic growth may be slowing, as recent data indicated, but fears of a hard landing are not justified as the slowdown was "within expectations" and will help recalibrate the economy, economists said.

Analysts have cut predictions for GDP growth after the release of a series of economic indicators last week. These forecast declining growth even after a three-year low of 8.1 percent in the first quarter.

"The situation is not good," said Wang Tao, chief China economist with UBS AG. The bank has lowered growth estimates for the second quarter to 8 percent, from 8.4 percent.

According to the National Bureau of Statistics, manufacturing activities were at their lowest levels in April since May 2009 as industrial production rose by 9.3 percent, while retail sales increased by 14.1 percent, the weakest in 14 months.

Fixed asset investment growth, the main driver of the economy, was at the slowest pace in a decade at 20.2 percent in the first four months. New property investment slowed to 18.7 percent growth from 23.5 percent in the first quarter.

Power output growth, a core measure of economic activity, slowed to less than 1 percent.

Fitch Ratings also maintained its prediction of the economy growing 8 percent this year, while ruling out a "hard-landing", according to Andrew Colquhoun, head of sovereign ratings for Fitch Asia Pacific.

"China is experiencing a policy-led economic slowdown in growth which was implemented by the authorities in response to the inflation pressure that emerged last year, and it seems to me well within the parameters of normal policy management," Colquhoun said.

"I don't expect China to have a hard landing ... I think the authorities will be happy to see growth slow somewhat to take the steam out of inflation," he added.

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