A shock slowdown for the world’s second-biggest economy sent tremors through global markets yesterday as fears of an end to China’s breakneck growth mounted.
Beijing said the economy grew at an annual pace of 7.7 per cent between January and March – hugely impressive by the standards of struggling Western rivals, but well below the 8 per cent expected and a slowdown from the 7.9 per cent pace achieved in the final three months of 2012.
Metals and oil were among the biggest victims as the data raised concerns over China’s voracious demand for commodities, sending Brent crude falling more than $2 a barrel to $100.55, the lowest since last July.
Aluminium crashed to its lowest for three and a half years while copper prices also hit an 18-month low – wiping billions off the FTSE 100’s contingent of miners, which make up more than 10 per cent of the index.
The sell-off spread across the Atlantic as the Dow Jones Industrial Average headed lower.
Analysts blamed slowing industrial production for the setback as annual growth of 8.9 per cent fell short of the 10 per cent expected by economists.
ETX market analyst Ishaq Siddiqi said: “The poor China data follows a week after a batch of poor US economic data, reinforcing the markets’ worry that the global recovery could be derailed.”
The news represents a fresh setback for Chinese premier Xi Jinping, who warned last week that the country’s period of “ultra-high speed growth” was over after a decade of double-digit growth. Ratings agency Fitch cut its credit score on China last week amid worries over a growing credit bubble. The World Bank also cut its 2013 forecast for China this year by 0.1 percentage point, although it still predicts a robust, 8.3 per cent advance.
ING Bank economist Tim Condon warned that market predictions of an 8.1 per cent advance for the year overall now looked too optimistic: “Our forecast was based partly on our view that stronger global growth as the year progressed would support stronger China growth. Today’s data undermines our confidence that the strengthening in global growth will be enough.”