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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