China GDP Slows To 7.4% In Q1CY14

China, the second largest economy expanded by 7.4 per cent during the first quarter of the year 2014 as compared to the same quarter of the previous year. During Q4FY13, the GDP growth of the country was 7.7 per cent whereas, the China government had set a target to grow at a rate of 7.5 per cent for the full year.

This was the slowest pace at which the Chinese economy had grown in the last 18 months after it registered a 7.4 per cent growth in the third quarter of 2012. During the said quarter, the primary industry had grown by 3.5 per cent, the secondary industry had grown by 7.3 per cent, whereas the tertiary industry was up by 7.8 per cent on Y-o-Y basis. The economic slowdown came amidst a generally mild inflation rate in the first quarter, with the consumer price index which is the main gauge of inflation, rising to 2.3 per cent during the first quarter of this year.

Apart from the above numbers, the data also showed that, during the first quarter the value added of state-owned enterprises saw a 4.5 per cent growth on yearly basis, while that of joint stock companies expanded by 10 per cent. Also, China's retail sales grew by 12 per cent on yearly basis to reach 6.21 trillion yuan (USD 1.01 trillion) during the first quarter of 2014. After deducting inflation, the actual growth rate in the retail sales of consumer goods was 10.9 per cent. The retail sales growth in rural areas outpaced that of urban areas in China. The sales in rural areas rose to 12.8 per cent in the first quarter of this year as compared to the same quarter of previous year. While the retail sales in urban areas climbed 11.8 percent on yearly basis during the first quarter of this year.

To gain control over the declining growth of the economy, the Chinese government has taken a number of measures in March, like tax reductions for the small and medium sized companies and also planned to step up railway investment and innovation to improve the economy. In addition to this, some steps taken include opening up its capital markets by announcing a tie-up with Hong Kong and also allowed for cross-border stock investment.

China is a major trading partner with a number of countries and if there is any significant slowdown, it will impact those countries too. The economy which exports goods to China will be much influenced by this slowdown in particular.