China fuelled fears over a flagging global recovery yesterday as the world's second-biggest economy showed its weakest pace of growth since 2009 in the opening three months of the year.
It grew at an annual pace of 8.1 per cent – still leaving Western economies in the shade, but far worse than expected after rumours that China's National Bureau of Statistics was set to report growth of more than 9 per cent. The news, which followed a week in which the eurozone debt crisis came roaring back, reviving market doubts over Spain and Italy, prompted an immediate drop in European shares with London's FTSE 100 falling back after two days of gains.
China is projected to contribute almost a third of global growth in 2012 and many investors are counting on the Asian powerhouse to help pull stagnant Western economies back to recovery.
China's GDP growth was down from the 8.9 per cent posted in the final three months of last year, making this the fifth successive quarter of slowing expansion and leaving China on course for its weakest year in a decade.
The Chinese premier Wen Jiabao has targeted growth this year of 7.5 per cent. But analysts are worried that China could experience an even sharper slowdown, as the authorities in Beijing grapple with a falling property market and attempt to shift the economy from its over-reliance on investment spending for growth.
The Chinese authorities responded to the 2008 financial crisis by unleashing a colossal stimulus-lending programme, equal to 50 per cent of GDP – and there are signs in yesterday's data that Beijing could be trying something similar again.
Banks extended 1trn yuan (£100bn) in new loans to Chinese firms in March and the central bank has twice relaxed how much private banks must hold in reserve.