PBOC says slower growth is result of needed restructuring

China’s slower expansion in the first quarter is “normal” as the world’s second-largest economy sacrifices growth to make structural reforms, People’s Bank of China Governor Zhou Xiaochuan said.

While a “mild” global slowdown is affecting China, the 7.7 percent gain was “overall normal” compared with the government’s 2013 target of 7.5 percent, Zhou told Bloomberg News outside a meeting of the International Monetary Fund in Washington on April 20.

Investors are assessing where the nation’s growth rate may settle as the working-age population declines, costs rise and officials wrestle with the environmental toll from polluting factories. A sustained shift to a lower-growth gear will affect everything from the outlook for the world’s automobile makers to iron-ore demand in Australia as BHP Billiton Ltd. (BHP) predicts expansion will moderate toward 6 percent later this decade.

“We should appreciate and get used to this new normal of slower growth which has seen a stable job market and moderate inflation pressures,” said Chang Jian, a Hong Kong-based economist at Barclays Plc who formerly worked for the World Bank. She sees an annual rate in the 6 percent to 8 percent range over the next 10 years.

Expansion in the first quarter missed the 8 percent median of economists’ forecasts and slowed from 7.9 percent in the previous three months, when Asia’s biggest economy emerged from a seven-quarter slowdown. Premier Li Keqiang this month urged more efforts to improve the quality and benefits of economic development as the government seeks to shift away from an export-reliant model.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu