China starts to feel the pinch

Growth of 8.9 per cent over a year earlier was slightly stronger than the 8.7 per cent forecast by Western economists, but the data raised concerns about the immediate outlook and how much support China can offer a struggling global economy.

Gross domestic output rose just 2 per cent from the previous quarter, suggesting to some economists that underlying momentum is slowing more rapidly than headline data implies.

A near 40 per cent plunge in the annual pace of property investment in December versus November’s rate underscored risks to China’s domestic demand even as it is trying to cope with those emanating from debt-ridden Europe – China’s biggest export market.

“Policy easing will continue. It’s a very significant slowdown already in China,” said an economist at Societe Generale.