Chinese Growth Is Weakest For Two Years

China’s GDP grew 7.4% in the first quarter amid growing evidence that the powerhouse economy is easing off

China’s economic growth slowed to 7.4% in the first quarter, raising the risk of job losses and a potential impact on the global economy.

The figure reported on Wednesday by the national bureau of statistics (NBS) was down from the previous quarter’s 7.7% and was below the full-year official growth target of 7.5% announced last month.

Beijing is trying to guide China to slower, more sustainable growth based on domestic consumption rather than trade and investment following a decade of explosive expansion

NBS spokesman Sheng Laiyun told reporters China was in the “crucial stage of structural reform”, while government efforts to get rid of outdated industrial capacity, conserve energy and protect the environment have “definitely come at a price”.

The result marks the fourth slowdown in the past six quarters and comes as Beijing shows a willingness to accept weaker growth.

Stock markets remained positive despite the news, possibly because investors hope that the slowdown will prompt another round of stimulus from Beijing.

The Hang Seng index was up 0.63% in Hong Kong and the Australian benchmark ASX 200 index was up 30 points at 5418 while

Chinese leaders have signalled they are willing to tolerate growth below the official target so long as the economy keeps creating enough jobs to avoid potential unrest. In a sign of concern about employment, they launched a mini-stimulus in March of higher spending on construction of railways, low-cost housing and other public works.

However, in a speech last week, premier Li Keqiang, the country’s top economic official, said the economy still faced “downward pressure” but ruled out additional stimulus. He said Beijing would focus on “long-term efforts to achieve sustainable and healthy development.”

The latest growth is the weakest the third quarter of 2012, when growth tumbled after an unexpected decline in demand for Chinese exports while the government was tightening controls on lending and investment to cool inflation.

Weaker growth could have global repercussions, hurting Asian economies and others such as Australia and Brazil for which China is the leading market for commodities and industrial components.

Chinese imports suffered an unexpectedly sharp contraction of 11.3 percent in March in a sign of weak raw materials demand from manufacturing and construction.

“A hard landing in China’s economy is one of the biggest risks clouding the outlook for the rest of emerging Asia,” said Capital Economics in a report this week.