China's soaring growth cools in weakest year for over a decade

China's breakneck pace of economic expansion cooled off in 2012 after the weakest year for the Red Dragon in more than a decade, official figures showed today.

The world's second-biggest economy advanced 7.8 per cent, the worst performance since 1999, although still far ahead of the growth rates of Western nations such as the UK, which stagnated last year.

But analysts took heart from figures showing that the pace of growth picked up again between October and December, accelerating to 7.9 per cent from the three-year low of 7.4 per cent in the previous quarter.

Chinese growth is expected to surge back above 8 per cent this year, although the World Bank cut its forecast to 8.4 per cent this week and said the nation could be weakened by a fall-off in global trade. Chinese growth has suffered this year from the impact of the eurozone crisis on the export-dependent nation as well as the fallout of a diplomatic dispute with Japan.

The nation's industrial machine ramped up production growth to 10.3 per cent in December, but there were also welcome signs that traditionally cautious savers are beginning to open their wallets as retail sales growth accelerated to 15.2 per cent in December.

The CMC Markets analyst Michael Hewson said: "This is particularly significant given that they have become a much more important number now given the recession in Europe, and China's problems with Japan.

"China will have to rely much less on its surplus in trade to Europe and other countries for GDP growth. This fall-off in demand will need to be offset domestically by demand at home."