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BEIJING - CHINA'S economy grew by 11.4 per cent last year, the fastest pace in 13 years, but it expects to see a moderate slowdown going ahead due to economic uncertainties in the United States.
Economists estimate China's growth this year could ease to about 10 per cent on the back of slowing exports to the US and domestic tightening measures.
Chinese officials, however, declined to speculate on the impact of a potential recession in the US, or give the government's growth estimate for this year, when they unveiled details of the country's economic performance at a press conference yesterday.
'I'm positive about China's economic growth this year. I think it will still be able to maintain stable but rapid growth,' said Mr Xie Fuzhan, the commissioner of the National Bureau of Statistics (NBS).
'But if economic growth sees a mild slowdown, that would be within our expectations.'
Signs of a slight easing in economic activity were already apparent from figures released by the NBS yesterday.
Economic growth in the fourth quarter dipped to 11.2 per cent, down from 11.9 per cent in the second quarter and 11.5 per cent in the third. Inflation for last month also slowed, to 6.5 per cent, down from November's 11-year high of 6.9 per cent.
China is still on course to overtake Germany this year as the world's third-biggest economy. Germany has yet to report its full-year data, but back-of-the-envelope calculations suggest China's economy last year may have been smaller than Germany's by just 5 per cent or less.
Beijing has been eager to downplay this comparison, emphasising instead that it is still a developing economy where the average income remains low. Indeed, much of the domestic attention in recent months has been focused on rising prices rather than the world-beating performance of the Chinese economy.
Full-year inflation in China last year reached 4.8 per cent, more than three times the 1.5 per cent recorded in 2006. Rising food and housing prices were the chief culprits, with the cost of meat alone rising by a whopping 31.7 per cent.
Analysts expect prices in China to continue rising well into this year, estimating that inflation could hit about 5 per cent or more.
'The threat of more generalised inflation is still very much there,' wrote Standard Chartered's Mr Stephen Green in a research note.
Ratings agency Fitch added in a report that higher inflation could affect China's 'global competitiveness by undermining macroeconomic stability or by contributing to social unrest'.
Such concerns have prompted the Chinese government to shift its top economic priority from closing the politically sensitive trade gap with the US and Europe, towards the more pressing domestic task of stabilising prices.
It remains to be seen, however, whether the fallout from the US sub-prime crisis, which has roiled stock markets worldwide, will force Beijing to rethink its priorities later this year.
A popular argument in recent years reckons that China's economy has 'decoupled' from the US business cycle, and would be relatively immune from any slowdown in America.
This view, however, finds little favour in Beijing. NBS spokesman Li Xiaochao told The Straits Times on the sidelines of yesterday's press conference: 'The notion of decoupling is impossible. China is so closely linked with the global economy. But it is really uncertain what impact the sub-prime crisis will eventually have and where the US economy will go from here.'
chinhon@sph.com.sg
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